EfTEN Real Estate Fund's Strong Performance in Q1 2025 Insights
EfTEN Real Estate Fund AS Shows Robust Growth in Q1 2025
In the initial quarter of 2025, EfTEN Real Estate Fund AS took strategic initiatives to deploy a substantial portion of its previously raised capital, focusing largely on the elderly care home sector. A notable move was made in February when the Fund’s wholly-owned subsidiary, EfTEN Hiiu OÜ, formalized a binding agreement to acquire a property located at Hiiu 42 in Tallinn. This acquisition aims to develop a comprehensive care home in partnership with Südamekodud AS, with an acquisition cost of €4 million and a potential additional €2.5 million earmarked for building reconstruction. Anticipated returns on this investment are projected at 8% annually. By the end of March, a real rights contract was successfully concluded, marking the transaction's finalization. A long-term lease agreement (10+10 years) with Hiiu Südamekodu OÜ was also signed, ensuring part of the property continues serving the North Estonia Medical Centre Foundation. This development will see the creation of the "Nõmme Südamekodu" general care home, which can accommodate up to 170 clients.
New Investments and Ongoing Projects
Further in January 2025, the Fund’s subsidiary EfTEN Ermi OÜ initiated construction on the second phase of the Tartu Südamekodu project, which will introduce 60 additional beds and a solar park to enhance the existing care home. The associated project expenditure is approximately €1.3 million, and completion is anticipated by July 2025, with expected returns of 8.1% per year. Upon the completion of these ambitious projects, EfTEN Real Estate Fund AS will manage four elderly care homes, collectively offering nearly 800 beds.
Financial Performance Overview
As of March 31, 2025, EfTEN Real Estate Fund AS reported consolidated sales revenues of €7.858 million for Q1, a slight decrease from €7.961 million in Q1 2024. Meanwhile, the consolidated net rental income (NOI) was €7.211 million, down from €7.343 million in the same period of the previous year. Impressively, the net rental income margin held steady at 92%, reflecting stable operational efficiency with direct property management costs accounting for 8% of total revenues.
The consolidated net profit for the first quarter of 2025 was reported at €4.167 million, an increase from €3.808 million in Q1 2024, largely driven by reduced interest expenses stemming from decreased EURIBOR rates, which lowered costs by €432 thousand or 19% compared to the first quarter of the prior year.
Real Estate Portfolio Expansion
As of the end of March 2025, the Group maintained ownership of 37 investment properties, reflecting a rise from 36 on December 31, 2024. The total fair value of these properties reached an impressive €380.160 million, up from €373.815 million, with acquisition costs recorded at €376.906 million compared to €370.561 million from the prior year-end. Notably, the Group holds a 50% share in a joint venture associated with the Palace Hotel in Tallinn, valued at €8.632 million as of March 31, 2025.
In the first quarter, the Group engaged in new and follow-on investments amounting to €6.345 million. This investment strategy has been complemented by progress on several construction projects, including the C-building at Valkla Care Home and the second phase of Ermi Care Home in Tartu, each attracting significant financial commitments during the quarter.
Financing and Capital Structure Analysis
During Q1 2025, the Fund's subsidiary EfTEN Riga Airport SIA successfully extended its loan arrangements with the bank. Over the approaching year, six subsidiaries within the Group have loan agreements maturing, totaling an outstanding balance of €20.38 million. The management anticipates a smooth refinancing process due to the stable rental cash flows from the properties. Currently, the Group's weighted average interest rate on outstanding loans is 4.37%, a decrease from 4.89% as of the end of 2024, with a consistent loan-to-value (LTV) ratio holding at 40%.
Moreover, the Fund's interest coverage ratio (ICR) showcased a strong position at 3.4 as of March 31, 2025, improving from 2.9 a year prior, reflecting enhanced financial stability.
Shareholder Insights
By March 31, 2025, the registered share capital of EfTEN Real Estate Fund AS remained unchanged at €114.403 million, comprising 11,440,340 shares each with a nominal value of €10. Remarkably, the net asset value (NAV) per share increased to €20.74 from €20.37, signifying a 1.8% rise over the quarter.
Frequently Asked Questions
What is EfTEN Real Estate Fund AS's primary investment focus?
EfTEN Real Estate Fund AS primarily invests in elderly care homes, enhancing its portfolio in the growing aging population market.
How has EfTEN's financial performance changed in Q1 2025?
The Fund experienced a net profit increase to €4.167 million, reflecting effective cost management and reduced interest expenses compared to the previous year.
What is the significance of the recent property acquisitions?
The recent acquisitions, particularly in the elderly care sector, align with strategic goals to expand capacity and improve service offerings for the elderly demographic.
How does EfTEN plan to manage its debt obligations?
EfTEN management anticipates a smooth refinancing process for maturing loans due to stable rental cash flow from its properties.
What has been EfTEN's approach to shareholder value?
EfTEN has focused on maintaining strong financial performance, evident in the increase of net asset value per share and solid dividend policy.
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