Fund Manager’s Commentary
In Q2 2025, the Baltic commercial real estate market continued to reflect similar trends as in previous quarters. Transaction activity remained very low, primarily due to a lack of equity capital, and modest economic growth did not bring new major tenants to the market. On a positive side, the decline in EURIBOR continued, resulting in reduced borrowing costs.
Despite intense competition in the tenant market, EfTEN Real Estate Fund AS managed to decrease portfolio’s vacancy by 0.7 percentage points during the quarter, down to 3.7%. New tenants were added in the retail segment, and after a long pause, the first faintly positive signs were also observed in the Estonian office segment. On the other hand, the high volume of new developments in recent years continues to pressure the Vilnius office market. In Q2, the Paemurru logistics center within the fund’s portfolio was completed, and construction of Block C at the Valkla elderly home was finalized. As a result, the fund’s sales revenue increased by 4.5% compared to Q1 and by 3.1% year-on-year.
The fund’s subsidiaries have floating interest rate bank loans. With the rapid decline in EURIBOR, interest expenses have decreased significantly. However, euro interest rates have now reached a level where further substantial decrease is unlikely. In this context, the fund has started fixing interest rates—one subsidiary entered into an interest rate swap agreement in June with a nominal value of €11.6 million at a rate of 1.995%. Given favourable swap terms, the fund plans to continue fixing interest rates for up to half of its loan portfolio.
Financial Performance Overview
EfTEN Real Estate Fund AS earned consolidated sales revenue of €8.210 million for Q2 2025 (Q2 2024: €7.957 million), and consolidated revenue for H1 2025 was €16.068 million (H1 2024: €15.918 million). This represents a 3.1% year-on-year increase for Q2 and a 1.0% increase for H1. Revenue increase was primarily driven by new investments in the logistics and elderly care sectors.
The fund’s consolidated net operating income (NOI) for H1 2025 was €14.845 million (H1 2024: €14.781 million), reflecting a 0.4% increase. The NOI margin was 92% in H1 (2024: 93%), indicating that direct property-related costs (including land tax, insurance, maintenance and improvement works), along with marketing expenses, accounted for 8% of the fund’s revenue (2024: 7%).
In Q2 2025, the fund earned a consolidated net profit of €4.025 million (Q2 2024: €2.442 million). The increase in net profit was primarily due to the positive change in the fair value of investment properties, which amounted to €546 thousand in June 2025, compared to a revaluation loss of €1.454 million in the same period in 2024. Additionally, the decrease in interest expenses resulting from the decline in EURIBOR had a positive impact on quarterly net profit—interest costs totalled €1.697 million in Q2 2025, down from €2.237 million a year earlier.
The consolidated net profit for H1 2025 was €8.192 million (H1 2024: €6.250 million). Interest expenses decreased by €973 thousand, or 22%, year-on-year.
As of 30 June 2025, the Group’s total assets amounted to €399.517 million (31 December 2024: €398.763 million), of which the fair value of investment properties accounted for 95.6% (31 December 2024: 93.7%).
Real estate portfolio
As of 30 June 2025, the Group held 37 (31 December 2024: 36) commercial real estate investments with a fair value of €382.018 million (31 December 2024: €373.815 million) and an acquisition cost of €378.218 million (31 December 2024: €370.561 million). In addition to the investment properties owned by the fund’s subsidiaries, the Group also holds a 50% interest in a joint venture that owns the Palace Hotel in Tallinn, with a fair value of €8.630 million as of 30 June 2025 (31 December 2024: €8.630 million).
In the first half of 2025, the Group invested a total of €7.657 million in both new properties and the development of the existing real estate portfolio.
In March, the Group’s subsidiary EfTEN Hiiu OÜ acquired a property located at Hiiu 42 in Tallinn for €4 million. Under an existing lease agreement, the North Estonia Medical Centre Foundation continues to occupy part of the property, while a long-term (10 + 10 years) lease was signed for the remaining space with Hiiu Südamekodu OÜ, a company within the Südamekodud AS group. In cooperation with the tenant and Südamekodud AS, the building will be partially redeveloped into a general elderly home called “Nõmme Südamekodu,” which will eventually accommodate up to 170 residents.
In H1 2025, construction of Block C at the Valkla care home was completed, and phase II construction began at the Ermi elderly home in Tartu.
In April 2025, the Paemurru logistics center—acquired in autumn of the previous year—was completed, with an additional €1.743 million invested in the property during the first half of the year.
In the first six months of 2025, the Group earned a total of €15.571 million in rental income, representing a 1% increase compared to the same period in 2024.
As of 30 June 2025, the vacancy rate for the Group’s investment properties stood at 3.7% (31 December 2024: 2.6%). The highest vacancy was in the office segment at 16.2%, where leasing of vacant space has taken longer than in previous periods. Compared to the end of last year, the most notable increase in vacancy occurred in the office building at Pärnu mnt 102 in Tallinn, where an additional 2.2 thousand sqm of space became vacant.
EfTEN Real Estate Fund AS conducts regular valuations of its investment properties twice a year—as of 30 June and 31 December. Based on the valuations carried out by Colliers International in June 2025, the fair value of the investment properties increased by 0.1%, resulting in a revaluation gain of €0.5 million for the fund.
Financing
In April 2025, subsidiaries of EfTEN Real Estate Fund AS increased their total bank loan commitments by €7.32 million, reflecting improved financial capacity. Additionally, bank financing totalling €2.67 million was used in the first half of the year for the construction of the Valkla elderly home and the Paemurru logistics center. In April, the fund’s subsidiary EfTEN Hiiu OÜ entered into a loan agreement of €3.25 million to finance the redevelopment of the building at Hiiu 42. As of the end of June, this loan had not yet been drawn down.
Over the next 12 months, loan agreements of eleven subsidiaries will mature, with a total outstanding balance of €40.641 million as of 30 June 2025. The LTV (Loan-to-Value) ratios of these maturing loans range from 37% to 46%, and the related investment properties generate stable rental cash flows. Therefore, management of the Fund does not foresee any obstacles to refinancing.
As of 30 June 2025, the Group’s weighted average interest rate on loan agreements was 3.95% (31 December 2024: 4.89%), and the overall LTV stood at 41% (31 December 2024: 40%). All loan agreements of the fund’s subsidiaries are based on floating interest rates. To mitigate interest rate risk, one of the Group’s subsidiaries entered into an interest rate swap agreement in June 2025 with a notional amount of €11.6 million, fixing the 1-month EURIBOR at 1.995%.
As of 30 June 2025, the fund’s interest coverage ratio (ICR) was 3.7 (30 June 2024: 2.9), with the improvement primarily driven by the decrease in EURIBOR.
Share information
As of 30 June 2025, the registered share capital of EfTEN Real Estate Fund AS was €114,403 thousand (31 December 2024: unchanged). The share capital consisted of 11,440,340 shares (31 December 2024: unchanged), each with a nominal value of €10 (31 December 2024: unchanged).
The net asset value (NAV) per share of EfTEN Real Estate Fund AS was €19.98 as of 30 June 2025 (31 December 2024: €20.37), reflecting a 1.9% decrease during the first half of 2025. Excluding dividend distributions, the fund’s NAV would have increased by 4.1% over the same period.
As of 30 June 2025, 32.18% of the shares belonged to the fund’s board and management members and persons associated with them.
CONSOLIDATED STATEMEMT OF COMPREHENSIVE INCOME
| 2nd quarter | 6 months | ||||
| 2025 | 2024 | 2025 | 2024 | ||
| € thousands | |||||
| Sales revenue | 8 210 | 7 957 | 16 068 | 15 918 | |
| Cost of services sold | -389 | -341 | -895 | -759 | |
| Gross profit | 7 821 | 7 616 | 15 173 | 15 159 | |
| Marketing costs | -187 | -178 | -328 | -378 | |
| General and administrative expenses | -941 | -880 | -1 947 | -1 819 | |
| Profit / loss from investment properties fair value changes | 546 | -1 454 | 546 | -1 454 | |
| Other operating income and expense | 15 | 44 | -22 | 86 | |
| Operating profit | 7 254 | 5 148 | 13 422 | 11 594 | |
| Profit/-loss from joint ventures | 87 | -204 | 29 | -254 | |
| Interest income | 35 | 64 | 118 | 165 | |
| Other finance income and expense | -1 739 | -2 238 | -3 542 | -4 473 | |
| Profit before income tax | 5 637 | 2 770 | 10 027 | 7 032 | |
| Income tax expense | -1 612 | -328 | -1 835 | -782 | |
| Net profit of the financial year | 4025 | 2442 | 8 192 | 6 250 | |
| Total comprehensive income for the period | 4 025 | 2 442 | 8 192 | 6 250 | |
| Earnings per share | |||||
| – basic | 0,35 | 0,23 | 0,72 | 0,58 | |
| – diluted | 0,35 | 0,23 | 0,72 | 0,58 | |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| 30.06.2025 | 31.12.2024 | ||
| € thousands | |||
| ASSETS | |||
| Cash and cash equivalents | 13 449 | 18 415 | |
| Short-term deposits | 0 | 2 092 | |
| Receivables and accrued income | 1 671 | 2 055 | |
| Prepaid expenses | 137 | 138 | |
| Total current assets | 15 257 | 22 700 | |
| Long-term receivables | 133 | 154 | |
| Shares in joint ventures | 1 989 | 1 960 | |
| Investment property | 382 018 | 373 815 | |
| Property, plant and equipment | 120 | 134 | |
| Total non-current assets | 384 260 | 376 063 | |
| TOTAL ASSETS | 399 517 | 398 763 | |
| LIABILITIES AND EQUITY | |||
| Borrowings | 45 418 | 30 300 | |
| Derivatives | 42 | 0 | |
| Liabilities and prepayments | 2 705 | 3 245 | |
| Total current liabilities | 48 165 | 33 545 | |
| Borrowings | 110 688 | 119 120 | |
| Other long-term liabilities | 2 090 | 1 928 | |
| Deferred income tax liability | 10 008 | 11 097 | |
| Total non-current liabilities | 122 786 | 132 145 | |
| TOTAL LIABILITIES | 170 951 | 165 690 | |
| Share capital | 114 403 | 114 403 | |
| Share premium | 90 306 | 90 306 | |
| Statutory reserve capital | 4 156 | 2 799 | |
| Retained earnings | 19 701 | 25 565 | |
| TOTAL EQUITY | 228 566 | 233 073 | |
| TOTAL LIABILITIES AND EQUITY | 399 517 | 398 763 |
