EfTEN Real Estate Fund III AS unaudited results for 1st quarter 2021

EfTEN Real Estate FundDespite of accelerated spread of Covid-19 and increased restrictions, the fund’s results for the first quarter of 2021 are beyond expectations good. The rental income of Saules Miestas shopping centre in Lithuania has decreased by 22% on average compared to the first quarter of previous year, due to temporary discounts, but the rental income of other properties was not materially affected by the crisis. At the same time, there are additional agreements in place with some of the tenants to postpone rental payments until May, which may have negative impact to fund’s cash flows.

The consolidated revenue of EfTEN Real Estate fund III AS for the first quarter of 2021 was 2.867 million euros (2020 I quarter: 2.443 million euros), increased by 17.4% compared to previous year. The Group’s net rental income in the first quarter of 2021 was 2.770 million euros (2020 I quarter: 2.262 million euros), increased by 22.5% compared to previous year. The Group’s net profit for the same period was 1.795 million euros (2020: 1.368 million euros). Better profit indicators are mainly a result of added rental income from new real estate investments made in 2020, yet also due to a decrease in vacancy in office buildings in Lithuania. The negative effect of Covid-19 to the fund’s rental income is approximately 150 thousand euros compared to the first quarter of previous year. Without the temporary Covid-19 discounts the fund’s consolidated real estate portfolio would earn 8.3% higher revenue.

In the first quarter of 2021 new rental agreements were signed in Ulonu and Laisves office buildings in Lithuania, which decreased the fund’s vacancy rate to 0.8%, i.e. out of the whole rental portfolio (124 thousand sqm) only 934 sqm of area was vacant at the end of March.

The margin of consolidated net rental income for the first quarter of 2021 was 97% (2020: 93%), thus, the expenses (incl. land tax, insurance, maintenance and repair cost and marketing expense) related to managing the buildings form 3% (2020: 7%) of the revenue. The fund’s expenses were lower mainly due to corona crisis related restrictions implemented in shopping centres and resulted lower marketing cost.

The total assets of the Group as of 31.03.2021 was 151.727 million euros (31.12.2020: 151.632 million euros), incl. the fair value of investment properties that formed 95% of the total assets (31.12.2020: same).

In the 1st quarter of 2021, the Group has earned free cash flow (EBITDA minus loan repayments and interest expense) 1.049 million euros (2020 1st quarter: 873 thousand euros). All of the loans were serviced as usual in the 1st quarter of 2021 and the subsidiaries of the fund did not use period of grace.

The weighted average interest rate of the Group’s loan agreements (incl. interest swap agreements) is 2.3% as of the end of March (31.12.2020: same) and LTV (loan to value) is 50% (31.12.2020: same).

Real estate portfolio

As of the end of March, 2021, the Group has 15 (31.12.2020: same) commercial real estate investments, the fair value of which forms 144.762 million euros as of balance sheet date (31.12.2020: 144.235 million euros) and the acquisition cost is 136.757 million euros (31.12.2020: 136.349 million euros).

Information on shares

EfTEN Real Estate Fund III net asset value as of 31.03.2021 was 17.35 euros (31.12.2020: 16.93 euros). The net asset value of EfTEN Real Estate fund increased by 2.5% in the first quarter of 2021 (2020 1st quarter: 1.9%).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

  1st quarter
€ thousands 2021 2020
Revenue 2,867 2,443
Cost of services sold -66 -88
Gross profit 2,801 2,355
Marketing costs -31 -93
General and administrative expenses -384 -414
Other operating income and expense 3 5
Operating profit 2,389 1,853
Other finance income and expense -421 -333
Profit before income tax 1,968 1,520
Income tax expense -173 -152
Net profit for the reporting period 1,795 1,368
Earnings per share
   – basic 0.43 0.32
   – diluted 0.43 0.32

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31.03.2021 31.12.2020
€ thousands
ASSETS
Cash and cash equivalents 5,702 5,128
Receivables and accrued income 1,063 2,018
Prepaid expenses 49 128
Total current assets 6,814 7,274
Long-term receivables 3 18
Investment property 144,762 144,235
Property, plant and equipment 145 101
Intangible assets 3 4
Total non-current assets 144,913 144,358
TOTAL ASSETS 151,727 151,632
LIABILITIES AND EQUITY
Borrowings 28,460 28,781
Derivative instruments 216 246
Payables and prepayments 755 1,995
Total current liabilities 29,431 31,022
Borrowings 43,320 43,587
Other long-term debt 974 957
Deferred income tax liability 4,724 4,583
Total non-current liabilities 49,018 49,127
Total liabilities 78,449 80,149
Share capital 42,225 42,225
Share premium 9,658 9,658
Statutory reserve capital 1,323 1,323
Retained earnings 20,072 18,277
Total equity 73,278 71,483
TOTAL LIABILITIES AND EQUITY 151,727 151,632
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