Börsiteade

Pealkiri

2017 12 months and 4th quarter consolidated unaudited interim report

Teade

Comment of the Chairman of the Board

For EfTEN Real Estate Fund III AS, the most significant event in 2017 and also
the fourth quarter was the listing of the Fund’s shares in the Nasdaq Baltic
main list. In total, the IPO process attracted 3.5 million euros in new equity
capital, which was oversubscribed by 5.7 times by the investors. In 2017, the
Fund made two new investments by acquiring Hortes gardening center and the
company developing Laagri Selver grocery store. Laagri Selver was opened in
December 2017 as initially planned. 

Last year, Saules Miestas, the Fund’s largest investment so far, celebrated its
10th year of operation. The Fund made an important investment in upgrading the
exterior of Saules Miestas, investing a total of 500 thousand euros in the
replacement of the Center’s exterior facade. 

Financial overview

The consolidated sales revenue of EfTEN Real Estate Fund III AS for year 2017
was EUR 7.300 million, which increased by 37% in a year. In 2017 the Group's
profit before revaluation of investment properties (including change in the
success fee reserve), depreciation and financial income/ -costs and income tax
expense (EBITDA) totalled EUR 5.659 million (2016: EUR 3.925 million). The
Group's net profit for the same period amounted to EUR 6.574 million,
increasing by 51% compared to 2016. 

The consolidated gross profit margin in 2017 was 98% (2016: 97%), therefore,
expenses directly related to management of properties (incl. land tax,
insurance, maintenance and improvement costs) accounted for only 2% (2016: 3%)
of the revenue in 2017. The Group's expenses related to properties, marketing
costs, general expenses, other income and expenses accounted for 22.8% of the
revenue in 2017. The respective indicator was 22.9% in 2016. 

As at 31.12.2017, the Group’s total assets were in the amount of EUR 97.291
million (31.12.2016: 77.233 million), including fair value of investment
property, which accounted for EUR 88.390 million (31.12.2016: 73.539 million)
of the total assets. 

In a year, the net asset value of the share of EfTEN Real Estate Fund III AS
increased by 13%, attributable to the growth in operating profit, low interest
rates and effective cost management. From the 2016 profit, EUR 1.503 thousand
was paid out as dividends in 2017. Without the dividend payment, the Fund's NAV
would have increased by 17% compared to 2016. Return on invested capital (ROIC)
was 21.6% in 2017 (2016: 22.5%). Access to flexible financing conditions will
help to increase the Group's competitiveness. In 2017, the Group entered into
new loan contracts in the total amount of EUR 5.1 million in connection with
the acquisition of new investment properties. One of the new loan agreements
was concluded at a fixed interest rate of 1.82% and the other at the rate of 1
month EURIBOR plus a margin of 1.4%. 

As at the end of the year, the average interest rate on Group's loan agreements
(including interest swap contracts) was 1.73% (2016: 1.67%) and the LTV (loan
to value) ratio was 52% (2016: 58%). 

The dividend policy of EfTEN Real Estate Fund III AS provides that the Group
will pay out 80% of the free cash flow to shareholders as (gross) dividends in
each accounting year. In 2017, EfTEN Real Estate Fund III AS paid the
shareholders (net) dividends in the amount of 1.5 million euros (2016: 411
thousand euros) i.e. 6% (2016: 3%) of paid-in capital. In 2018, the Fund's
Management Board will propose to the shareholders to pay out EUR 2.2 million in
(net) dividend from the 2017 net profit, which represents 6.1% of the share
capital paid in by the end of 2017. Dividend per share would be 68 cents (2016:
63 cents). 



Real Estate Portfolio

The Group invests in commercial real estate with a strong and long-term tenant
base. At the end of 2017, the Group had 8 (2016: 6) commercial investment
properties with a fair value as at the balance sheet date of EUR 88.4 million
(31.12.2016: 73.5 million) and acquisition cost of EUR 81.7 million
(31.12.2016: 69.7 million). 



Information on shares

As at 31.12.2017, payments made to the share capital of EfTEN Real Estate Fund
III AS total EUR 35.883 million (31.12.2016: 24.891 million) and the number of
shares as at 31.12.2017 was 3,222,535 (31.12.2016: 2,385,263). EfTEN Real
Estate Fund III AS listed its shares on NASDAQ Tallinn Stock Exchange in
November 2017. 

As at 31.12.2017 EfTEN Real Estate Fund III AS had two shareholders with
ownership interest in excess of 10% – Altius Energia OÜ, with an ownership
interest of 14.1% and Järve Kaubanduskeskus OÜ, with an ownership interest of
10.2% of the company’s shares. 




         Marilin Hein
         CFO
         Phone 655 9515
         E-mail: [email protected]