Comment by EfTEN Capital managing director Kristjan Tamla
The Baltic real estate market showed the first signs of recovery in 2024. Several commercial real estate owners adjusted their selling price expectations downwards. In addition, the accelerated decline in EURIBOR in the second half of the year began to reduce the borrowing costs of property owners and increased transaction activity in the residential real estate market. This created good opportunities for the EfTEN United Property Fund to invest the uninvested capital.
In August, the UNA retail park in Vilnius was added to the fund’s portfolio, and in December, as part of the largest commercial real estate transaction in the Baltics last year, the Kristiine shopping center in Tallinn was invested in. This means that by the end of 2024 the fund is fully invested, and the coming year will be the first one where financial results are based on a fully invested portfolio. In addition, the Uus-Järveküla residential development is expected to be completed by the end of the year or early 2026.
Financial overview
According to the preliminary results, EfTEN United Property Fund earned the highest annual profit in its history in 2024 (1.62 million euros). The fund earned 967 thousand euros in dividend and interest income during the year (888 thousand euros in 2023). At the same time, expenses decreased by 40 thousand euros (198 thousand euros in 2024 vs. 238 thousand euros in 2023). At the end of the year, the weighted average interest rate on the fund’s loans was 5.4%, decreasing by 240 basis points year-on-year. The decline was due to the lower EURIBOR, the Uus-Järveküla development investment refinanced with a lower margin in the autumn, and the financing of new investments (UNA shopping center and Kristiine center) obtained on more favourable terms as compared to the portfolio average.
In December, the fund earned a profit of 816k euros, which was affected by the regular year-end valuation of the fund’s assets. As a result, the biggest upward valuations were recorded by investments in the Kristiine shopping center and the Uus-Järveküla residential development project. This is the highest monthly profit in funds history.
Kristiine shopping centre transaction was made at the end of 2024 under conditions where the seller needed to quickly sell the property. Therefore, the transaction took place at a significantly lower price compared to the asset’s book value and the so-called market price. At the end of the year, the property was valued at market price in line with the independent appraisal by Colliers.
The Uus-Järveküla residential development had record sales in December 2024 – 9 terraced houses were sold or booked by clients in a month. A total of 165 terraced and semi-detached house units are planned in the development, of which almost 75% have been purchased or booked. The last development phase which includes 32 terraced houses is soon to be started.
The net asset value (NAV) of EfTEN United Property Fund units was 11,06 euros at the end of December, increasing by 3,1% per month. If the fund’s investment in EfTEN Real Estate Fund AS shares were to be reflected according to the net asset value, EfTEN United Property Fund’s NAV would be 11,2 euros, increasing also by 3,1% per month.
EfTEN United Property Fund will publish its unaudited 2024 results on February 4 and will then inform investors about the planned distributions in 2025 and the to be organized webinar.
A more detailed overview of EfTEN United Property Fund’s portfolio can be found on the fund’s website: https://eftenunitedpropertyfund.ee/en/fund-results-2/
Kristjan Tamla
Managing Director
Phone: 655 9515
E-mail: [email protected]
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