Börsiteade

Pealkiri

EfTEN Real Estate Fund III AS unaudited results for 2nd quarter and st half year 2021

Teade

Comment of the fund manager Viljar Arakas:

The  financial results  of EfTEN  Real Estate  Fund III  AS in the first half of
2021 have  been good  beyond expectations.  The fund's  EBITDA for the first six
months  of this  year totals  4.89 million euros,  which is  27% higher than the
EBITDA  for the  same period  of last  year. By  the beginning  of the year, the
alarmingly  rapid  spread  of  the  coronavirus  had  severely limited business,
especially in Latvia and Lithuania, and the outlook was pessimistic. In Estonia,
significant  movement restrictions came into force in February. Nevertheless, we
were  able  to  keep  all  the  fund's  assets  running successfully - as far as
restrictions allowed, and we applied very strict controls on running costs.

In terms of management, the focus in the first half of the year was primarily on
our customers i.e. tenants. Customer-specific solutions were found for all kinds
of  business interruptions caused by the pandemic, and the occupancy rate of the
fund's  rental space has been very good. As at the end of June, the vacancy rate
of the fund's real estate portfolio is only 0.7%. Despite the delays in payments
due  to the corona  crisis (mainly in  the Saules Miestas  shopping center), the
payment  behavior  of  tenants  has  also  been good. In connection with payment
problems,  we have  also made  agreements with  tenants to defer payment, mainly
until  the end of August, and  we have been able to  keep the rotation number of
tenants to a minimum.

The  successful emission of  shares in the  first half of  the year in the total
amount  of  15.13 million  euros  is  also  worth  noticing.  A  total of 4,564
subscription  orders were  submitted in  the emission  and it was oversubscribed
3.6 times.  The costs of emission were again minimal for investors, amounting to
only  about  0.4% of  the  issue  volume.  The  external  advisors were involved
minimally  by the management company to the organization of the emission and the
offer was made only in Estonia.

In the first half of 2021, we made additional investments in the fund's existing
portfolio,  mainly in  the territory  of the  Saules Miestas  shopping center in
Shiauliai,  Lithuania, where the fund's subsidiary built a separate KFC fast food
restaurant  building. As  fund managers,  we are  constantly looking for ways to
increase the value of our existing assets through additional developments. As an
additional  example of such investments, we can cite the construction of a solar
park on the roof of the Laagri Selver shopping center building.

In  the  first  half  of  the  year,  we  made one new investment, acquiring two
industrial  and warehouse buildings in Panevezhys,  Lithuania, for a total of 10
million  euros. The unleveraged entry yield of  the transaction with a bank loan
was  8.0% and the purchase price of the building per square meter was 500 euros,
which  is lower than the restoration value  of the house. The building is leased
by  ADAX UAB  on the  basis of  a 16-year  lease agreement.  The transaction was
financed by Siauliu bankas in the amount of 6 million euros.

The  successful first half of the  fund allows us to look  at the second half of
2021 with an optimistic look.


Financial overview

EfTEN  Real  Estate  Fund  III  AS's  consolidated  sales revenue for the second
quarter  of 2021 totaled 3.088 million euros (2nd quarter of 2020: 2.422 million
euros), increasing by 27.5% (0.666 million euros) compared to the previous year.
Of the increase in rental income, 349 thousand euros (52%) was the rental income
from  the acquisition  of new  investments (Pirita  care home,  Rutkausko office
building and Ramygalos warehouse and industrial building complex). The remaining
increase  was mainly due to temporary  rent discounts from last year's Covid-19
discount on the existing real estate portfolio (like-for-like).

EfTEN Real Estate Fund III AS's consolidated sales revenue for the first half of
2021 is   5.955 million   euros   (first  half  of  2020: 4.865 million  euros),
increasing  by 22.4% (1.090 million euros) compared to the previous year. Rental
income  from investment  properties acquired  during the  last 12 months totaled
665 thousand euros (61%).

The  Group's profit before revaluations of investment properties, changes in the
fair  value of interest rate  swaps and income tax  expense in the first half of
2021 totaled  3.951 million  euros  (first  half  of 2020: 3.132 million euros),
increasing by 28.3% year-on-year.

In  the first half  of 2021, the fund  earned consolidated EBITDA of 4.9 million
euros (first half of 2020: 3.8 million euros).

During  the next 12 months, the  loan agreements of the  two subsidiaries of the
Group  will mature. Most  of the Group's  loans are concluded  with a term of 5
years, which is refinanced upon termination of the loan agreement. Over the next
12 months,  7.5 million euros,  i.e. 10% of  the total  loan portfolio,  will be
refinanced  from  the  Group's  loan  liabilities. As of 30.06.2021, the average
interest  rate of the  Group's loan agreements  (incl. considering interest rate
swap  agreements)  is  2.2% (31.12.2020:  2.3%) and  LTV  (Loan  to  Value) 46%
(31.12.2020: 50%).

During  the first half  of 2021, the Group  has earned a  free cash flow of 2.2
million euros (6 months of 2020: 1.7 million euros), of which the cash flow from
investment properties during the last 12 months amounts to 215 thousand euros.

In  mid-June 2021, the Group acquired one  new investment property in Panevezhys,
Lithuania. The cost of investment property, including transaction costs, totaled
10.011 million euros and the annual rental income is 799 thousand euros.

As  of the end of June,  2021, the Group has 16 (31.12.2020: 15) commercial real
estate  investments  with  a  fair  value  of 157.162 million euros (31.12.2020:
144.235 million   euros)  and  an  acquisition  cost  of  147.137 million  euros
(31.12.2020: 136.349 million euros) at the balance sheet date.


In June, the fund conducted its usual valuation of investment properties, during
which  the value  of the  fund's real  estate portfolio increased by 1.4% (2.020
million  euros).  The  change  in  value  was  mainly  due to improved cash flow
expectations  in Saules Miestas  and the Ulonu  office building. The increase in
the value of other objects was mainly due to a decrease in exit yield by half or
a quarter of a percentage point.

The  net asset value of  EfTEN Real Estate Fund  III shares as of 30.06.2021 was
17.60 euros  (31.12.2020: 16.93 euros). The net asset value of EfTEN Real Estate
Fund III AS increased by 4.0% in the first half of 2021.

In  April 2021, the general meeting of the fund decided to distribute a total of
2,798 thousand  euros (66.3 eurocents  per share) in  net dividends from the net
profit  of 2020. Without the  distribution of dividends,  the net asset value of
the fund's share would have increased by 6.7% in the first half of the year.

In  June 2021, EfTEN  Real Estate  Fund III  AS conducted  a public  offering of
shares,  as a result of which the share  capital of the fund increased by 8,500
thousand  euros. During  the share  emission payments  in the  amount of 15,130
thousand euros were made to the fund's share capital.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                                I half of the
                                                   II quarter        year
                                                 ------------------------------
 EUR thousands                                       2021   2020  2021       2020
-------------------------------------------------------------------------------
 Revenue                                          3,088  2,422 5,955      4,865
-------------------------------------------------------------------------------
 Cost of services sold                              -73    -59  -139       -147
-------------------------------------------------------------------------------
 Gross profit                                     3,015  2,363 5,816      4,718
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Marketing costs                                    -59    -43   -90       -136
-------------------------------------------------------------------------------
 General and administrative expenses               -492   -358  -876       -772
-------------------------------------------------------------------------------
 Gain / loss from revaluation of investment
 properties                                       2,020 -3,986 2,020     -3,986
-------------------------------------------------------------------------------
 Other operating income and expense                   3     -5     6          0
-------------------------------------------------------------------------------
 Operating profit                                 4,487 -2,029 6,876       -176
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Other finance income and expense                  -418   -345  -839       -678
-------------------------------------------------------------------------------
 Profit before income tax                         4,069 -2,374 6,037       -854
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Income tax expense                                -394    201  -567         49
-------------------------------------------------------------------------------
 Net profit for the financial year(1)             3,675 -2,173 5,470       -805
-------------------------------------------------------------------------------
 Earnings per share
-------------------------------------------------------------------------------
 - Basic                                           0.83  -0.51  1.27      -0.19
-------------------------------------------------------------------------------
 - Diluted                                         0.83  -0.51  1.27      -0.19
-------------------------------------------------------------------------------

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                   30.06.2021   31.12.2020
-----------------------------------------------------------
  EUR thousands
-----------------------------------------------------------
  ASSETS
-----------------------------------------------------------
  Cash and cash equivalents             9,932        5,128
-----------------------------------------------------------
  Receivables and accrued income        2,120        2,018
-----------------------------------------------------------
  Prepaid expense                          19          128
-----------------------------------------------------------
  Inventory                                29            0
-----------------------------------------------------------
  Total current assets                 12,100        7,274
-----------------------------------------------------------

-----------------------------------------------------------
  Long-term receivables                     4           18
-----------------------------------------------------------
  Investment property                 157,162      144,235
-----------------------------------------------------------
  Property, plant and equipment           150          101
-----------------------------------------------------------
  Intangible assets                         3            4
-----------------------------------------------------------
  Total non-current assets            157,319      144,358
-----------------------------------------------------------
  TOTAL ASSETS                        169,419      151,632
-----------------------------------------------------------

-----------------------------------------------------------
  LIABILITIES AND EQUITY
-----------------------------------------------------------
  Borrowings                           10,695       28,781
-----------------------------------------------------------
  Derivative instruments                  180          246
-----------------------------------------------------------
  Payables and prepayments              1,102        1,995
-----------------------------------------------------------
  Total current liabilities            11,977       31,022
-----------------------------------------------------------

-----------------------------------------------------------
  Borrowings                           62,197       43,587
-----------------------------------------------------------
  Other long-term debt                  1,015          957
-----------------------------------------------------------
  Deferred income tax liability         4,944        4,583
-----------------------------------------------------------
  Total non-current liabilities        68,156       49,127
-----------------------------------------------------------
  Total liabilities                    80,133       80,149
-----------------------------------------------------------

-----------------------------------------------------------
  Share capital                        50,725       42,225
-----------------------------------------------------------
  Share premium                        16,289        9,658
-----------------------------------------------------------
  Statutory reserve capital             1,489        1,323
-----------------------------------------------------------
  Retained earnings                    20,783       18,277
-----------------------------------------------------------
  Total equity                         89,286       71,483
-----------------------------------------------------------
  TOTAL LIABILITIES AND EQUITY        169,419      151,632
-----------------------------------------------------------

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