The net asset value of EfTEN Real Estate Fund AS shares as of 30.06.2024
10 July 2024 - 6:00AM
UK Regulatory
The net asset value of EfTEN Real Estate Fund AS shares as of
30.06.2024
Comment from the fund manager, Viljar Arakas:
"The fund’s overall results of the first half of 2024 meet the
expectations of the management company. Vacancy remains below 3% at
a portfolio level, which is a very good result considering the
general business environment. If we exclude the tenant’s rent
payment difficulties related to Hortes properties, the payment
behaviour of tenants is good and the level of arrears remains low.
According to the fund manager, Hortes properties can be treated as
customer-specific case and does not reflect a wider deterioration
of the tenants' financial situation. The fund manager has already
started looking for new solutions for both Hortes properties. The
largest vacancy is currently in the office sector, accounting for
76% of the portfolio’s total vacancy. However, it is divided
between 10 different office buildings, and new tenants are
constantly being added. Weaker demand for office space is a clear
trend both globally as well as in every capital of the Baltic
states. In general, the downward trend in interest rates will lead
to increased transaction activity in the second half of 2024, which
will help to increase the fair value of the conservatively priced
portfolio of EfTEN Real Estate Fund AS."
EfTEN Real Estate Fund AS consolidated rental
income was 2,572 thousand euros in June, which is 17 thousand euros
less than in May. The slight decrease in rental income was due to
reduced foot traffic in shopping centers due to the first summer
month, lower turnover rent, and slightly increased vacancy rates in
the office space segment. The fund's consolidated EBITDA for June
was 2,188 thousand euros, 65 thousand euros less than in May.
June's expenses included costs associated with investment property
valuations and the comparison period included a one-time income of
29 thousand euros from the establishment of an easement on a
logistics center property in Tallinn.
Colliers International conducted a regular
valuation process for Fund’s investment properties in June,
resulting in a 0.4% decrease in the fair value of the fund's real
estate portfolio and a consolidated loss of 1,454 thousand euros
from the revaluation. The loss from the revaluation was mainly due
to a more conservative cash flow forecast for office segment
buildings in Tallinn and in the Saules Miestas shopping centre. The
discount rates used for discounting cash flows and capitalization
rates remained unchanged compared to the end of last year in most
of the calculations. Although EURIBOR has slightly decreased since
the end of 2023 and the market expects even lower interest rates by
autumn, these changes had not yet affected actual market
transactions as of the end of June.
The consolidated rental income for the first six
months of this year totals 15,343 thousand euros, 1.3% higher than
the same period last year. The fund's investment properties
generated 14,803 thousand euros in net operating income (NOI) in
the first half of the year, a 0.6% increase from the same period
last year. The fund's EBITDA for the first six months of this year
is 13,077 thousand euros, a 0.5% increase compared to the same
period last year.
The vacancy rate of the fund's real estate
portfolio was 2.9% as of the end of June. The fund has 9,780 square
meters of vacant space, including 7,477 square meters in the office
space segment.
During the first six months of 2024, EfTEN Real
Estate Fund AS generated 5,329 thousand euros in free cash flow
(EBITDA minus loan payments minus interest expenses), which is 621
thousand euros less than the same period last year. The decrease in
cash flow is primarily due to the increase in EURIBOR. Based on the
fund's results for the first five months of this year, the
potential gross dividend is at 39.4 cents per share, 10.2% less
than the same period last year.
The weighted average interest rate on the bank
loans of the fund's subsidiaries was 5.65% at the end of June.
Compared to the end of 2023, the weighted average interest rate has
decreased by 0.26 percentage points and is at the same level as in
August 2023.
As of June 30, 2024, the net asset value (NAV)
per share of EfTEN Real Estate Fund AS was 19.7904 euros, and the
EPRA NRV was 20.5862 euros. The NAV per share decreased by 0.1% in
June. Without the revaluations of investment properties, the fund's
NAV would have increased by 0.6% in June.
Marilin Hein
CFO
Phone +372 6559 515
E-mail: marilin.hein@eften.ee
- EREF_reports_monthly_06.2024