EfTEN SPV19 OÜ, a subsidiary of EfTEN Real Estate Fund III AS, signed a contract under the law of obligations to acquire a property located at Hunditubaka tee 12 / Karukella tee 5 in Tallinn from OÜ Arca Varahaldus. By the end of 2020, the construction of an aged care home will be completed in the property and it will be given to a long-term rent to Pirita Kodu OÜ. It will be the first aged care home in the fund’s portfolio.
„With Pirita Pansionaat, EfTEN enters a segment with clear future outlook, because the demand for care services is facing a continuous growth. We are glad that the first transaction concerns a home that is brand-new and can be found at a perfect location for clients from Tallinn and its surroundings“, said Viljar Arakas, Member of the Management Board of EfTEN Real Estate Fund III AS.
The construction works of the Pirita Pansionaat started in the autumn 2019 and will be completed in December this year. The aged care home’s property is located close to the Pirita River and a new residential area. The size of the property is 13,270 sq m. The total area of the building under the construction is about 6,000 sq m.
The home will have beds for 250 clients. In addition, in a separate section of the building, therapy services will be provided as well for the elderly as for the children, with two special rooms with pools, for conducting sessions of gymnastics, yoga, water gymnastics, etc.
Pirita Kodu OÜ will operate the Pirita Pansionaat, based on a signed rental agreement for 10 years, with an option to prolong it for another 10 years. The tenant will start making the rental payments from 1 April 2021 and during the launch period the rental fee will gradually increase, reaching the full amount as of 1 January 2022.
The price of the transaction without VAT is 6.2 million euros and half of it is an investment in the fund’s equity and the other half – 3.1 million euros – a loan taken by EfTEN SPV19 OÜ. The transaction is financed by Swedbank. The financial volume of the transaction makes up 4% of the fund’s current assets. The yield on non-leveraged rental income for the first full year of operation is 7% per annum. In order to complete the transaction, a consent of the Estonian Competition Authority is required, after which a real right contract will be singed for the transfer of ownership of the property.
As EfTEN Real Estate Fund III AS has previously fully invested the equity raised in the previous share issues, the parent company of the fund will lend the equity required for the transaction, as a bridge financing from Swedbank in the total amount of 3.1 million euros. The respective loan will be repaid with the proceeds from the share issue to be organized in the spring of 2021. The exact volume of the share issue and other commercial terms will be decided by the management of the fund by the end of the first quarter of 2021 and a corresponding proposal will be submitted to the Annual General Meeting for approval.
After the acquisition, the fund’s investment portfolio encompasses 15 properties: in addition to Pirita Pansionaat, DSV logistics centres in Tallinn, Riga and Vilnius, a sales and service centre of ABC Motors in Tallinn, two Hortes garden centres and Laagri Selver retail centre in Tallinn, Piepilsetas Logistics Centre and airBaltic headquarters in Riga, Evolution business centre, Saulės Miestas retail centre in Šiauliai, as well as three office buildings in Vilnius: Laisves 3, Ulonų and Rutkausko.
Before the transaction, in the EfTEN Real Estate Fund III AS portfolio retail properties constitute 37%, office buildings 35%, and logistics and manufacturing spaces 28%. Across the countries, 60% of the fund’s portfolio is in Lithuania, followed by Estonia (23%) and Latvia (17%). After the transaction, retail properties constitute 35%, office buildings 34%, logistics and manufacturing spaces 27% and aged care homes 4%; by countries 57% of the fund’s portfolio is in Lithuania, followed by Estonia (26%) and Latvia (17%).
EfTEN SPV19 OÜ that acquired the property is a 100% subsidiary founded in the Republic of Estonia. The Management Board Members of EfTEN SPV19 OÜ are Viljar Arakas and Tõnu Uustalu. The private limited company does not have a Supervisory Board. The foundation of a subsidiary is not considered to be the purchase of significant share for the purposes of the “Requirements for Issuers” section of the Rules of NASDAQ OMX Tallinn Stock Exchange. Members of the Council and the Management Board of EfTEN Real Estate Fund III AS also have no other personal interest in the transaction.
EfTEN Real Estate Fund III AS is an alternative investment fund founded in 2015, which is listed in Nasdaq Baltic Main List from December 01, 2017. The fund’s assets are managed by EfTEN Capital AS, an asset management company, regulated by the Estonian Financial Supervision Authority. The company is also managing EfTEN Kinnisvarafond AS, EfTEN Kinnisvarafond II AS and limited partnership funds PEFoF, EdTEN Residential Fund and EfTEN Real Estate Fund 4. EfTEN Capital group of companies (EfTEN Capital AS with its subsidiaries) manages 50 commercial real estate buildings where over 1,200 tenants are operating. Total market value of the real estate assets under management is about 750 million euros.