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Monthly commentary of the fund manager and net asset value of EfTEN Real Estate Fund III AS as of 30.04.2020

Teade

Comment by fund manager Viljar Arakas

Due to the state of an emergency that started in the Baltics in the middle of
March, it could have been expected that April will be the most difficult month
of the year for the tenants of the fund. During the crisis, we have taken
measures with our clients to mitigate the effects of the emergency situation, as
a result of which the fund's performance in April was better than we expected
initially. There is a reason to believe that May will be even better for the
fund's tenants due to the easing of the reduction of movement and business
activities restrictions.

EfTEN Real Estate Fund III AS's largest single investment is Saules Miestas
Shopping Center in Shiauliai, Lithuania. Shopping centers in Lithuania were
opened already on April 23, including the tenants of Saules Miestas. However, it
is estimated that it will take 4-5 months to reach the pre-crisis traffic and
turnover levels in the centers. In early May, the Lithuanian government adopted
a rent compensation measure with a total financial value of EUR 100 million,
where tenants of shopping centers can claim up to 50% of rental and ancillary
costs, if the owner of the shopping center has provided a temporary rental
discount of at least 30% from the start of the quarantine period for up to 60
day after the termination date of quarantine period. This measure also offers
significant financial relief to the tenants of Saules Miestas.

The good results of April give reason to assume that the impact of the crisis on
the rental income of EfTEN Real Estate Fund III AS is temporarily negative, but
due to the good diversification of the fund's assets, available funds,
agreements with tenants and banks, the fund's business is still stable.

Monthly commentary of the fund manager and the net asset value of EfTEN Real
Estate Fund III AS as of 30.04.2020

The net asset value (NAV) of EfTEN Real Estate Fund III AS as of 30.04.2020 was
17.29 euros. NAV increased by 0.6% in April. The net asset value of the EPRA
share (net book value excluding deferred income tax liability and fair value of
interest rate derivatives) was 18.40 euros as of 30.04.2020. EPRA NAV increased
by 0.7% during April.

The fund's April results turned out to better than were initially expected by
the fund manager. Due to the emergency situation, agreements were made with the
tenants to temporarily (for three months) reduce rental income mainly in the
logistics sector by a total of 39 thousand euros, including extending the term
of existing leases by the same period. In the retail segment, rental income was
19 thousand euros higher than in March, mainly due to the adjustment of
conservative estimates made a month earlier. The temporary agreement to reduce
the rental income of one tenant in the logistics sector came into force on May
1st, as a result of which the rental income will decrease by additional 15
thousand euros. Compared to the usual level of rental income, due to the special
situation caused by Covid-19, the fund's rental income has temporarily decreased
by an average of 130 thousand euros per calendar month, i.e. by 15%.

In order to mitigate liquidity risk, the Fund's 9 subsidiaries (out of 13) have
entered into agreements for temporary loan grace periods, which provided
additional liquidity in April in the amount of 206 thousand euros. In April, the
fund earned a consolidated adjusted cash flow (EBITDA less interest expense
minus principal on loans) totaling 454 thousand euros. Thus, even without grace
periods, the fund's cash flow would have been positive in the amount of 248
thousand euros, which is, however, on average 33% less than the fund's usual
adjusted cash flow level.

The Fund's consolidated sales revenue in April totaled 786 thousand euros (813
thousand euros in March), EBITDA 624 thousand euros (556 thousand euros in
March) and net profit 465 thousand euros (422 thousand euros in March). The
higher EBITDA in April is mainly related to the due diligence costs due to to
the acquisition of new properties a month earlier.

As of 30.04.2020, the consolidated cash balance of EfTEN Real Estate Fund III AS
was 10.6 million euros, of which 4.7 million euros is the balance of uninvested
capital received from the last share issue.

The volume of consolidated assets of EfTEN Real Estate Fund III AS as of
30.04.2020 was 141.0 million euros (31.12.2019: 132.8 million euros) and equity
73.0 million euros (31.12.2019: 71.17 million euros).

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