The consolidated sales revenue of EfTEN Real Estate Fund III AS for third quarter of 2020 was EUR 2.833 million (third quarter of 2019: EUR 2.364 million), which increased by 20% in a year.
The sales revenue of two properties acquired at the end of February 2020 (airBaltic office building and Kekava logistics center in Riga), Tähesaju Hortes completed at the end of last year and the Atea office building in Vilnius acquired in August 2020 totalled 506 thousand euros, i.e. excluding new acquisitions, III quarter sales revenue was 1.6% lower compared to the same period last year. The decrease in sales revenue is related to temporary discounts due to the Covid-19 pandemic. Rental income returned to its normal level in the last month of the quarter, in September.
EfTEN Real Estate Fund III AS’s consolidated sales revenue for 9 months of 2020 was 7.698 million euros (9 months 2019: 7.000 million euros).The Group’s profit before revaluations of investment properties, changes in the fair value of interest rate swaps and income tax expense totalled 5.141 million euros in the 9 months of 2020 (9 months 2019: 4.459 million euros). The Group earned a significantly lower net profit of 747 thousand euros (net profit for 9 months of 2019: 5,127 thousand euros) due to the economic uncertainty caused by Covid-19, the expected decrease in cash flows and the resulting decrease in the fair value of investment properties.
During the 9 months of 2020, the fund earned consolidated EBITDA of 6.1 million euros (9 months of 2019: 5.5 million euros). The negative economic impact of the Covid-19 crisis on the fund’s results is significantly smaller than initially expected, which is partly due to the good diversification of EfTEN Real Estate Fund III AS’s real estate portfolio by sectors and countries, as well as strong tenant base, good capitalization and conservative financing strategy.
The consolidated gross profit margin was 97% in the first 9 months of 2020 (9 months of 2019: the same), so expenses directly related to the management of real estate (incl. Land tax, insurance, maintenance and improvement costs) accounted for 3% of sales revenue. Expenses related to the Group’s real estate, distribution expenses, overheads and other income and expenses accounted for a total of 21% of sales revenue in the first 9 months of 2020 (during the first 9 months of 2019: 22%).
As at 30.09.2020, the Group’s total assets were in the amount of EUR 142.872 million (31.12.2019: EUR 132.829 million), including fair value of investment property, which accounted for 96% (31.12.2019: 85%) of the total assets.
During the next 12 months, there will be deadlines for several loan agreements of the Group subsidiaries. Most of the Group’s borrowings are concluded with a term of 5 years, which are refinanced upon the term of the loan agreement. Over the next 12 months, 19.317 million euros, meaning 29% of the total loan portfolio, will be refinanced from the Group’s loan liabilities. As at 30.09.2020, the average interest rate of the Group’s loan agreements (taking into account interest rate swap agreements) is 2.23% (31.12.2019: 1.84%) and LTV (Loan to Value) is 49% (31.12.2019: 52%).
Amendments to real estate portfolio, 3rd quarter 2020
In August 2020, EfTEN Real Estate Fund III AS’s 100% subsidiary EfTEN Rutkausko UAB acquired an office building in Vilnius with an acquisition cost of 11.8 million euros. The anchor tenant of the office building is the IT company Atea UAB. The acquisition was financed with 39% of the equity, as a result of which the entire fund’s last year’s emission of 16 million euros has been invested.
As at end of September 2020, the Group has 14 (31.12.2019: 11) commercial investment properties with a fair value as at the balance sheet date of EUR 137.354 million (31.12.2019: EUR 113.011 million) and acquisition cost of EUR 130.079 million (31.12.2019: EUR 101.746 million).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| III quarter | 9 months | |||
| € thousands | 2020 | 2019 | 2020 | 2019 |
| Revenue | 2,833 | 2,364 | 7,698 | 7,000 |
| Cost of services sold | -75 | -82 | -222 | -229 |
| Gross profit | 2,758 | 2,282 | 7,476 | 6,771 |
| Marketing costs | -70 | -83 | -206 | -303 |
| General and administrative expenses | -394 | -313 | -1,166 | -977 |
| Gain/ loss on change in fair value of investment property | 0 | 0 | -3,986 | 1,460 |
| Other operating income and expense | 4 | 0 | 4 | -1 |
| Operating profit | 2,298 | 1,886 | 2,122 | 6,950 |
| Interest income | 0 | 5 | 0 | 5 |
| Finance costs | -289 | -306 | -967 | -1,036 |
| Profit before income tax | 2,009 | 1,585 | 1,155 | 5,919 |
| Income tax expense | -197 | -156 | -408 | -792 |
| Total comprehensive income for the financial period | 1,812 | 1,429 | 747 | 5,127 |
| Earnings per share | ||||
| – Basic | 0.43 | 0.34 | 0.18 | 1.41 |
| – Diluted | 0.43 | 0.34 | 0.18 | 1.41 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| 30.09.2020 | 31.12.2019 | |
| € thousands | ||
| ASSETS | ||
| Cash and cash equivalents | 4,313 | 12,986 |
| Short-term deposits | 0 | 6,000 |
| Receivables and accrued income | 927 | 667 |
| Prepaid expenses | 49 | 51 |
| Total current assets | 5,289 | 19,704 |
| Investment property | 137,354 | 113,011 |
| Property, plant and equipment | 229 | 114 |
| Total non-current assets | 137,583 | 113,125 |
| TOTAL ASSETS | 142,872 | 132,829 |
| LIABILITIES AND EQUITY | ||
| Borrowings | 21,862 | 21,147 |
| Derivative instruments | 272 | 271 |
| Payables and prepayments | 879 | 1,132 |
| Total current liabilities | 23,013 | 22,550 |
| Borrowings | 45,528 | 34,225 |
| Other long-term liabilities | 871 | 609 |
| Deferred income tax liability | 4,287 | 4,274 |
| Total non-current liabilities | 50,686 | 39,108 |
| Total liabilities | 73,699 | 61,658 |
| Share capital | 42,225 | 42,225 |
| Share premium | 9,658 | 9,658 |
| Statutory reserve capital | 1,323 | 936 |
| Retained earnings | 15,967 | 18,352 |
| Total equity | 69,173 | 71,171 |
| TOTAL LIABILITIES AND EQUITY | 142,872 | 132,829 |
