EfTEN Real Estate Fund III AS unaudited results for 4th place

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Fund manager’s comments on 2021 results

For EfTEN Real Estate Fund III AS, 2021 was a successful year that exceeded expectations. Despite the two corona waves during the year, the group was able to increase both rental income and EBITDA in every commercial real estate segment, even without the income from the new commercial buildings. The vacancy rate for the commercial space in the portfolio remained at a record low of less than 1%. The revaluation of investment properties generated a total profit of 6.4 million euros for 2021 and the portfolio’s unlevered primary net yield was 7.1% at year-end. The fund generated a total free cash flow of EUR 4.55 million in 2021, of which the total gross dividend would be EUR 3.64 million according to the fund’s dividend policy. Taking into account the obligation to maintain minimum cash balances resulting from the special conditions of the loans of the fund’s subsidiaries and the short-term liquidity requirements, the fund’s management board proposes to the supervisory board to distribute dividends in excess of the dividend policy totaling EUR 4.06 million (80 cents per share).

As of December 31, 2021, the fund has EUR 5.9 million in uninvested equity, the secure investment of which is a priority for the fund management. In view of the fact that the level of returns from transactions on the Baltic commercial real estate market has steadily decreased in recent years, the fund’s management does not plan to organize a new issue of shares in the current financial year.

Financial overview

The consolidated revenues of EfTEN Real Estate Fund III AS for the 12 months 2021 amounted to EUR 12.921 million (12 months 2020: EUR 10.731 million), which represents an increase of 20% compared to the previous year. The Group’s net rental income for 2021 amounted to EUR 12.412 million (2020: EUR 10.103 million), an increase of 23%. The Group’s net income for the same period amounted to EUR 13.099 million (12 months 2020: EUR 3.317 million).

The fund generated total revenues of €3.508 million in the fourth quarter of 2021, an increase of €475,000 (16%) compared to the same period last year. The fund’s net rental income for the fourth quarter of 2021 was EUR 2,916,000, an increase of 17.7% compared to the same period last year.

In December 2021, Colliers International carried out a regular valuation of the fund’s real estate portfolio, which resulted in a 2.8% increase in the value of the real estate portfolio (EUR 4.423 million), mainly due to the expected rental cash flow and low exit yields. The fund’s consolidated net profit for Q4 was EUR 5.355 million (Q4 2020: EUR 2,310 million).

The consolidated net rental income margin for the 12 months of 2021 was 96% (2020 12 months: 94%), so costs directly related to property management (including property taxes, insurance, maintenance and improvement costs) and marketing costs accounted for 4% (2020: 6 %) of sales. Interest expenses increased in 2021 due to the addition of loans taken for the acquisition of new real estate investments, but also due to an increase in the interest rate by 0.3-0.5 percentage points as a result of the refinancing of loans taken out the Ulonu office building and logistics centers of DSV.

The assets of the Group amounted to EUR 176.401 million as of December 31, 2021 (December 31, 2020: EUR 151.632 million), i.e. the fair value of the investment property accounted for 92% of the assets (December 31, 2020: 95%).

In 2021, the Group received bank loans for the acquisition and development of new real estate assets totaling EUR 6.3 million. The weighted average interest rate of the Group’s loan agreements (including interest rate swap agreements) at the end of December is 2.3% (31/12/2020: same) and the LTV (loan to value) is 44% (31/12/2020: 50%).

real estate portfolio

In mid-June 2021, the group acquired a new real estate investment in Panevežyse, Lithuania. The total cost of the real estate investment, including transaction costs, amounted to EUR 10.011 million and the annual rental income of the building is EUR 799,000.

At the end of December 2021, the Group had 16 (12/31/2020: 15) commercial real estate investments with a fair value as of the balance sheet date of EUR 161.961 million (12/31/2020: EUR 144.235 million) and acquisition costs of EUR 147.557 million (12/31/2020: EUR 136.349 million).

In 2021, the group generated total rental income of EUR 12,165 thousand. Rental income calculated on a comparable basis amounted to EUR 9,283 thousand in 2021, 7% more than in 2020. In 2021, the Group made a total of EUR 369 thousand in depreciation in connection with the Covid-19 crisis, i.e. excluding these depreciations . In 2021, the Group’s rental income would have been 2.9% higher.

Share Information

The net asset value per share of EfTEN Real Estate Fund III AS as of December 31, 2021 was EUR 19.11 (December 31, 2020: EUR 16.93). The NAV of EfTEN Real Estate Fund III AS shares increased by 12.9% over the course of 2021. In June 2021, the fund distributed a total of EUR 2.798 million from the profit for 2020 (spring 2020: EUR 2.745 million). Excluding the payment of dividends, the fund’s NAV would have increased by 16.3% in 2021.

In addition to the NAV per share calculated in accordance with the above IFRS, EfTEN Real Estate Fund III AS also calculates the EPRA (European Public Real Estate Association) recommended NAV per share in order to provide investors with the most appropriate fair value of net assets. The policy recommended by EPRA assumes a long-term economic strategy for real estate companies, so temporary differences in a situation where no asset sale is likely to occur in the foreseeable future will obscure the transparency of the fair value of the fund’s net assets. Therefore, the deferred income taxes related to investment properties and the fair value of financial instruments (interest rate swaps) are eliminated from the net asset value calculated under IFRS to determine the net asset value of EPRA.

In 2021, the group generated free cash flow of EUR 4.550 million (12M 2020: EUR 3.747 million), of which the total gross dividend would be EUR 3.64 million according to the fund’s dividend policy. In light of the obligation to maintain minimum cash balances resulting from the special terms of loans from the Fund’s subsidiaries and short-term liquidity needs, the Fund’s Board of Directors is proposing to the Board of Governors to pay a dividend in excess of the dividend policy of $4.06 million , euros (80 cents per share).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

IV quarter 12 months
2021 2020 2021 2020
thousand €
revenue 3,508 3,033 12,921 10,731
cost of sales -48 -103 -241 -325
gross income 3,460 2,930 12,680 10,406
marketing costs -124 -97 -268 -303
General and administrative expenses -1,024 -431 -2,326 -1,597
Gain/loss on revaluation of investment property 4,422 612 6,442 -3,374
Other operating income and expenses -17 -7 1 -3
operating result 6,717 3.007 16,529 5.129
Other financial income and expenses -420 -355 -1,678 -1,322
profit before income tax 6,297 2,652 14,851 3,807
income tax expense -942 -342 -1,752 -490
net income 5,355 2,310 13,099 3.317
earnings per share
– Basic 1.06 0.55 2.79 0.79
– Diluted 1.06 0.55 2.79 0.79

CONSOLIDATED BALANCE SHEET

12/31/2021 12/31/2020
thousand €
FINANCIAL ASSETS
Cash and cash equivalents 13,074 5.128
Receivables and accruals 876 2.018
Prepaid Expenses 314 128
inventory 29 0
total current assets 14,293 7,274
Long-term claims 4 18
investment property 161,961 144,235
Property, plant and equipment 140 101
Intangible Assets 3 4
Total Fixed Assets 162.108 144,358
TOTAL ASSETS 176,401 151,632
LIABILITIES AND EQUITY
credits 7,645 28,781
Derivative Instruments 121 246
Liabilities and Prepayments 1,349 1,995
Total current liabilities 9.115 31.022
credits 63,440 43,587
Other long-term debt 987 957
Deferred income tax liability 5,945 4,583
Total non-current liabilities 70,372 49.127
Total Liabilities 79,487 80.149
share capital 50,725 42,225
capital reserve 16,288 9,658
Legal reserve capital 1,489 1,323
retained earnings 28,412 18,277
total capital 96,914 71,483
TOTAL LIABILITIES 176,401 151,632

Marilin Hein
CFO
Telephone: 6559 515
E-mail: [email protected]

  • EREFIII_12_Monate_2021_Interim Report_GER

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