Fund Manager’s Commentary
Despite a challenging economic environment, EfTEN Real Estate Fund AS succeeded in 2025 in increasing both total consolidated rental income (+3%) and portfolio EBITDA (+1.3%). During 2025, the Fund’s subsidiaries made new investments amounting to €6.6 million in the elderly care segment and €5.3 million in the logistics segment. In the remainder of the real estate portfolio, the Group invested a total of €2.3 million.
The share of EfTEN Real Estate Fund AS is primarily a dividend share. In 2025, the Fund generated free cash flow of €13.088 million, which is 18% higher than in the previous year. Based on the free cash flow earned, the Fund could, in accordance with its dividend policy, distribute gross dividends of €10.5 million. Taking into account the Fund’s conservative financing policy and the annuity-based loan repayments, the Fund’s subsidiaries are able to increase their dividend capacity by refinancing loans where the loan-to-value (LTV) ratio has fallen below the limits set in the Fund’s capital management principles and where operating cash flows exceed loan principal and interest payments by more than two times. Considering the additional funds potentially received through loan refinancing, the Management Board proposes to the Supervisory Board and the General Meeting to distribute net dividends from retained earnings in the total amount of €13.8 million (€1.2 per share) in spring 2026, which is 8.1% more than in the previous year.
In a prolonged period of low economic activity, the Group pays close attention to maintaining a high occupancy level across its buildings. At the end of 2025, the occupancy rate of the Group’s entire real estate portfolio stood at 96.8% (31 December 2024: 97.4%). Occupancy remains lowest in the office segment (85.6%), where the Fund continues to invest in order to meet market demand for smaller office units.
In the summer of 2025, the second stage of the ERMI elderly care home located in Tartu municipality was completed, with rental income gradually increasing to the contractual level by August. Together with the Hiiu elderly care home added in April and the completion of a new stage of the Valkla elderly care home, rental income from the elderly care segment increased to €1.4 million in 2025, i.e. by 74%.
Excluding non-cash gains and losses and income tax expense, the Group generated the highest operating profit in its history in 2025, amounting to €20.24 million, which is 12.5% higher than in 2024. A significant contribution to the higher profit was primarily made by the decrease in interest expenses resulting from the decreased EURIBOR. While in 2024 the weighted average interest rate of the Fund’s loan portfolio was 5.82%, in 2025 it was 4.35%. At the end of 2025, the weighted average interest rate on the Fund’s loans stood at 3.99%.
Overview of Financial Results
EfTEN Real Estate Fund AS’s consolidated sales income for the fourth quarter of 2025 amounted to €8.656 million (Q4 2024: €8.314 million), while sales income for the last 12 months totalled €33. 083 million (12 months of 2024: €32.238 million). Compared to the same period last year, fourth-quarter sales income increased by 4.1% and 12-month sales income by 2.6%. The increase in sales income was primarily supported by new investments in the logistics and elderly care segments.
The Fund’s consolidated net rental income (NOI) for the 12 months of 2025 amounted to €30.685 million (12 months of 2024: €29.977 million), representing an increase of 2.4%. The 12-month NOI margin remained at 93% (2024: unchanged), meaning that costs directly related to property management (including land tax, insurance, maintenance and improvement works) as well as marketing expenses accounted for 7% of the Fund’s sales income.
In the fourth quarter of 2025, the Fund’s consolidated net loss was €1.208 million (Q4 2024: net profit of €3.460 million), of which €4.005 million was attributable to a loss from changes in the fair value of investment properties (Q4 2024: gain of €0.831 million).
For the 12 months of 2025, the Fund’s consolidated net profit amounted to €12.235 million (12 months of 2024: €13.564 million). In 2025, the Fund earned a total loss of €3.459 million from changes in the fair value of investment properties (2024: loss of €1.080 million). Interest expenses decreased by €1.996 million, or 23%, compared to the same period last year.
As of 31 December 2025, the Group’s total assets amounted to €405.851 million (31 December 2024: €398.763 million), of which the fair value of investment properties accounted for 93.9% of total assets (31 December 2024: 93.7%).
Real Estate Portfolio
As of 31 December 2025, the Group held 37 commercial real estate investments (31 December 2024: 36), with a fair value of €381.032 million as at the balance sheet date (31 December 2024: €373.815 million) and an acquisition cost of €381.235 million (31 December 2024: €370.561 million). In addition to the real estate investments owned by the Fund’s subsidiaries, the Group also holds a 50% interest in the joint venture owning the Palace Hotel in Tallinn, the fair value of which amounted to €8.680 million as at 31 December 2025 (31 December 2024: €8.630 million).
Investments in 2025
Over the 12 months of 2025, the Group invested a total of €10.676 million in both new investment 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, Tallinn, for €4.0 million. Under an existing lease agreement, the property continues to be partially used by the North Estonia Medical Centre Foundation, while the remaining premises were leased under a long-term lease agreement (10 + 10 years) to Hiiu Südamekodu OÜ, which belongs to the Südamekodud AS group. In cooperation with the tenant and Südamekodud AS, the building is being partially redeveloped into a general nursing home, “Nõmme Südamekodu”, which will accommodate up to 170 elderly care residents in the future.
In the first half of 2025, construction works of the C-wing of the Valkla elderly care home were completed, and in the third quarter, the second stage of the ERMi elderly care home in Tartu was finalised.
In April 2025, the Paemurru logistics centre, acquired in autumn of the previous year, was completed. Total investments in the logistics centre during the reporting year amounted to €1.746 million.
Rental income
Over the 12 months of 2025, the Group earned total rental income of €32.013 million, which is 3% higher than in the same period of 2024.
As at 31 December 2025, the vacancy rate of the real estate investments owned by the Group stood at 3.2% (31 December 2024: 2.6%). Vacancy was highest in the office segment (14.4%), where the letting of vacant premises has taken longer than in previous periods.
Financing
Due to improved financial capacity, the subsidiaries of EfTEN Real Estate Fund AS increased the total amount of their bank loans by €7.32 million in April 2025. In addition, in 2025 the construction works of the Valkla and ERMi elderly care homes and the Paemurru logistics centre were financed with bank loans in the total amount of €3.184 million. The Fund’s subsidiary EfTEN Hiiu OÜ entered into a loan agreement in the amount of €3.650 million to finance the reconstruction works of the building located at Hiiu 42, of which €0.7 million had been drawn down as at 31 December 2025.
Over the next 12 months, loan agreements of ten Group subsidiaries will mature, with an outstanding balance of €37.057 million as at 31 December 2025. The loan-to-value (LTV) ratios of the maturing loan agreements range between 34% and 60%, and the investment properties generate stable rental cash flows. Accordingly, the Group’s management does not anticipate any obstacles to the extension of these loan agreements.
As at 31 December 2025, the weighted average interest rate of the Group’s loan agreements was 3.99% (31 December 2024: 4.89%), and the LTV (Loan-to-Value) ratio was 41% (31 December 2024: 40%). All loan agreements of the Fund’s subsidiaries are linked to floating interest rates. To hedge interest rate risk, two Group subsidiaries entered into interest rate swap agreements with a total notional amount of €22.6 million, thereby fixing the floating interest rate (1-month EURIBOR) at levels of 1.995% and 2.2%.
The interest coverage ratio (ICR) of the Fund’s loans was 4.0 in 2025 (2024: 3.0). The increase in the ICR was mainly caused by the decrease in EURIBOR.
Due to the scheduled repayments of loans secured by the Group’s investment properties and the low level of financial leverage, the Fund’s management plans to refinance loans also in early 2026, thereby increasing the Fund’s capacity to distribute dividends.
Share information
In November 2025, the Fund issued 84,506 new shares at an issue price of €19.11 per share, consisting of a nominal value of €10.00 and a share premium of €9.11. As a result of the issue, the Fund’s share capital increased by €845 thousand and the share premium by €770 thousand (total increase of €1,615 thousand). Direct costs related to the share issue amounted to €20 thousand. The increase in share capital was registered in the Commercial Register on 27 November 2025.
As at 31 December 2025, the registered share capital of EfTEN Real Estate Fund AS amounted to €115,248 thousand (31 December 2024: €114,403 thousand). The share capital consisted of 11,524,846 shares (31 December 2024: 11,440,340 shares) with a nominal value of €10 per share (31 December 2024: unchanged).
As at 31 December 2025, the net asset value (NAV) per share of EfTEN Real Estate Fund AS was €20.32 (31 December 2024: €20.37). The NAV per share decreased by 0.25% in 2025. Without dividend distributions, the Fund’s NAV would have increased by 4.7% over the year.
In 2025, the trading turnover of EfTEN Real Estate Fund AS shares on the Tallinn Stock Exchange amounted to €6.16 million, doubling compared to the previous year.
During 2025, the Group generated adjusted cash flow (EBITDA minus loan principal repayments minus interest expenses) of €13.088 million (2024: €11.109 million), increasing by 18% compared to the same period last year. This was primarily driven by additional cash flows from new acquisitions and development projects, as well as lower interest expenses resulting from the decrease in EURIBOR. Based on the cash flow generated, the Fund could, in accordance with its dividend policy, distribute gross dividends of €10.5 million.
Due to the Fund’s conservative financing policy and annuity-based loan repayments, the Fund’s subsidiaries are able to increase their dividend payment by refinancing loans where the loan-to-value (LTV) ratio has fallen below the limits set out in the Fund’s capital management principles and where operating cash flows exceed loan principal and interest payments by more than two times. Taking into account the additional funds released through loan refinancing, the Management Board proposes to the Supervisory Board and the General Meeting to distribute net dividends from retained earnings in spring 2026 in the total amount of €13.8 million (€1.2 per share), i.e. 8.1% more than in the previous year.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| IV quarter | 12 months | |||
| 2025 | 2024 | 2025 | 2024 | |
| € thousands | ||||
| Revenue | 8,656 | 8,314 | 33,083 | 32,238 |
| Cost of services sold | -399 | -337 | -1,677 | -1,569 |
| Gross profit | 8,257 | 7,977 | 31,406 | 30,669 |
| Marketing costs | -250 | -203 | -721 | -692 |
| General and administrative expenses | -1,138 | -987 | -3,982 | -3,666 |
| Profit / loss from valuation of investment properties | -4,005 | 831 | -3,459 | -1,080 |
| Other operating income and expense | 31 | 1 | 50 | 88 |
| Operating profit/loss | 2,895 | 7,619 | 23,294 | 25,319 |
| Profit / loss from joint ventures | 55 | 53 | 222 | -118 |
| Interest income | 45 | 62 | 185 | 278 |
| Other finance income and expense | -1,521 | -2,052 | -6,693 | -8,696 |
| Profit before income tax | 1,474 | 5,682 | 17,008 | 16,783 |
| Income tax expense | -2,682 | -2,222 | -4,773 | -3,219 |
| Net profit for the reporting period | -1,208 | 3,460 | 12,235 | 13,564 |
| Net comprehensive profit for the reporting period | -1,208 | 3,460 | 12,235 | 13,564 |
| Earnings per share | ||||
| – basic | -0.11 | 0.32 | 1.07 | 1.25 |
| – diluted | -0.11 | 0.32 | 1.07 | 1.25 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| 31.12.2025 | 31.12.2024 | |
| € thousands | ||
| ASSETS | ||
| Cash and cash equivalents | 19,957 | 18,415 |
| Short-term deposits | 320 | 2,092 |
| Derivatives | 13 | 0 |
| Receivables and accrued income | 1,697 | 2,055 |
| Prepaid expenses | 293 | 138 |
| Total current assets | 22,280 | 22,700 |
| Long-term receivables | 164 | 154 |
| Shares in joint ventures | 2,182 | 1,960 |
| Investment property | 381,032 | 373,815 |
| Property. plant and equipment | 193 | 134 |
| Total non-current assets | 383,571 | 376,063 |
| TOTAL ASSETS | 405,851 | 398,763 |
| LIABILITIES AND EQUITY | ||
| Borrowings | 42,261 | 30,300 |
| Derivatives | 6 | 0 |
| Liabilities and prepayments | 2,913 | 3,245 |
| Total current liabilities | 45,180 | 33,545 |
| Borrowings | 111,727 | 119,120 |
| Other long-term liabilities | 1,992 | 1,928 |
| Deferred income tax liability | 12,748 | 11,097 |
| Total non-current liabilities | 126,467 | 132,145 |
| Total liabilities | 171,647 | 165,690 |
| Share capital | 115,248 | 114,403 |
| Share premium | 91,076 | 90,306 |
| Statutory reserve capital | 4,156 | 2,799 |
| Retained earnings | 23,724 | 25,565 |
| TOTAL EQUITY | 234,204 | 233,073 |
| TOTAL LIABILITIES AND EQUITY | 405,851 | 398,763 |
