EfTEN Real Estate Fund III unaudited results for 3rd quarter and 9 months 2020

EfTEN Real Estate FundThe 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

 

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