The Fund manager's comment
In a prolonged period of low economic activity, financial results of the EfTEN Real Estate Fund AS have gradually improved. This is due to the fund's strong focus on maintaining low vacancy rates, new successful investments in the elderly care and logistics segments, as well as reduced interest costs. As a result, the fund's free cash flow has increased, which, together with the planned refinancing of bank loans, is expected to allow the fund's management to propose a record dividend to shareholders in spring 2026.
The first positive signs of improved occupancy observed in the spring continued into the third quarter. The fund's portfolio vacancy rate decreased for the second consecutive quarter, reaching 3.6% at the end of September. In the summer, the second phase of the ERM care home located in Tartu municipality was completed, and the rental income from this property gradually reached the full contractual level by August. Together with the addition of the Hiiu care home in April and the completion of the new phase of the Valkla care home, rental income from the care home segment in the fund's portfolio increased to 4.7% in the third quarter, which is nearly half as much as a year ago.
The decrease in portfolio vacancy and the addition of new rental space led to growth in both net rental income (NOI) and EBITDA, which were respectively 5.1% and 6.3% higher than in the third quarter of 2024. During the first nine months of this year, the fund has earned potential gross dividends of EUR 0.6666 per share, which is 12.6% more than a year earlier. Considering the periodic principal repayments of loans and the strong financial-leverage indicators, the fund's management plans to refinance bank loans at the beginning of 2026 and is expected to propose to the General Meeting of Shareholders the payment of net dividends of EUR 1.20 per share for the year 2025, which is 8.1 % more than proposed in the spring of 2025 and 20% more than in spring 2024.
In the third quarter, the nearly two-year downward trend in EURIBOR interest rates came to a halt. As a significant further decline in interest rates is unlikely, the fund continued the interest rate fixing process that began at the end of the second quarter. In September, the fund's Latvian subsidiary entered into an interest rate swap agreement with a nominal amount of EUR 11.1 million at a fixed rate of 2.2%. By the end of the third quarter, a total of EUR 22.7 million of the fund's subsidiaries' loans were covered by interest rate swap agreements, representing 15% of the fund's consolidated loan portfolio.
Financial Performance Overview
EfTEN Real Estate Fund AS generated consolidated sales revenue of EUR 8.359 million in the third quarter of 2025 (Q3 2024: EUR 8.006 million), and EUR 24.427 million for the 9-month period (9 months of 2024: EUR 23.924 million). Third-quarter sales revenue increased by 4.4% compared to the same period last year, and 9-month sales revenue grew by 2.1%. The growth in sales revenue was primarily supported by new investments in the logistics and care home sectors.
The fund's consolidated net rental income (NOI) for the 9-month period of 2025 amounted to EUR 22.678 million (9 months of 2024: EUR 22.203 million), representing a growth of 2.1%. The NOI margin remained at 93% (2024: same), meaning that costs directly related to property management (including land tax, insurance, maintenance and improvement works) as well as marketing expenses accounted for 7% of the fund's revenue.
In the third quarter of 2025, the fund earned a consolidated net profit of EUR 5.251 million (Q3 2024: EUR 3.854 million). The increase in net profit was mainly driven by higher sales revenue and lower interest expenses due to the decline in EURIBOR - interest expenses totalled EUR 1.603 million in Q3 2025 compared to EUR 2.171 million in Q3 2024
The consolidated net profit for the 9-month period of 2025 was EUR 13.443 million (9 months of 2024: EUR 10.104 million). Interest expenses decreased by EUR 1,541 thousand, or 23%, year-on-year.
During the 9-month period of 2025, the Group generated adjusted cash flow (EBITDA minus loan repayments minus interest expenses) of EUR 9.53 million, which is 19% higher than in the same period last year. This increase is primarily attributable to cash flows from new acquisitions and developments, as well as lower interest expenses resulting from the decline in EURIBOR. Based on the fund's dividend policy, the fund could pay gross dividends of EUR 0.6666 per share for the nine-month period. Considering the low level of financial leverage and the periodic principal repayments of loans, the fund's management plans to refinance subsidiary loans at the beginning of 2026 and pay net dividends of EUR 1.20 per share to shareholders.
As of 30 September 2025, the Group's total assets amounted to EUR 403.493 million (31 December 2024: EUR 398.763 million), of which the fair value of investment properties accounted for 95.0% (31 December 2024: 93.7%).
Real estate portfolio
As of 30 September 2025, the Group held 37 (31 December 2024: 36) commercial real estate investments with a fair value of EUR 382.268 million (31 December 2024: EUR 373.815 million) and an acquisition cost of EUR 379.467 million (31 December 2024: EUR 370.561 million). In addition to the investment properties owned by the fund's subsidiaries, the Group also holds a 50% interest in a joint venture that owns the Palace Hotel in Tallinn, with a fair value of EUR 8.633 million as of 30 September 2025 (31 December 2024: EUR 8.630 million).
In the first 9 month of 2025, the Group invested a total of EUR 8.907 million in both new properties and the development of the existing real estate portfolio.
In March, the Group's subsidiary EfTEN Hiiu OÜ acquired a property located at Hiiu 42 in Tallinn for EUR 4 million. Under an existing lease agreement, the North Estonia Medical Centre Foundation continues to occupy part of the property, while a long-term (10 + 10 years) lease was signed for the remaining space with Hiiu Südamekodu OÜ, a company within the Südamekodud AS group. In cooperation with the tenant and Südamekodud AS, the building will be partially redeveloped into a general elderly home called "Nõmme Südamekodu," which will eventually accommodate up to 170 residents.
In H1 2025, construction of Block C at the Valkla care home was completed, and phase II construction began at the Ermi elderly home in Tartu.
In April 2025, the Paemurru logistics centre-acquired in autumn of the previous year-was completed, with an additional EUR 1.743 million invested in the property during the first half of the year.
In the first 9 months of 2025, the Group earned a total of EUR 23.660 million in rental income, representing a 3% increase compared to the same period in 2024.
As of 30 September 2025, the vacancy rate for the Group's investment properties stood at 3.6% (31 December 2024: 2.6%). The highest vacancy was in the office segment at 16.8%, where leasing of vacant space has taken longer than in previous periods.
Financing
Due to improved financial capacity, the subsidiaries of EfTEN Real Estate Fund AS increased their total bank loan amount by EUR 7.32 million in April 2025. In addition, during the 9-month period of 2025, bank loans were used to finance construction works of the Valkla care home and the Paemurru logistics centre in the total amount of EUR 2.83 million. In April, the fund's subsidiary EfTEN Hiiu OÜ signed a loan agreement to finance the reconstruction of the building at Hiiu Street 42 in the amount of EUR 3,250 thousand. After the balance sheet date, in October 2025, a loan agreement addendum was signed, increasing the loan amount to EUR 3,650 thousand.
Over the next 12 months, loan agreements of eleven subsidiaries will mature, with a total outstanding balance of EUR 41.406 million as of 30 September 2025. The LTV (Loan-to-Value) ratios of these maturing loans range from 37% to 59%, and the related investment properties generate stable rental cash flows. Therefore, management of the Fund does not foresee any obstacles to refinancing.
As of 30 June 2025, the Group's weighted average interest rate on loan agreements was 3.95% (31 December 2024: 4.89%), and the overall LTV stood at 41% (31 December 2024: 40%). All loan agreements of the fund's subsidiaries are linked to floating interest rates. To hedge interest rate risk, two subsidiaries of the Group entered into interest rate swap agreements with a total nominal amount of EUR 22.6 million, under which the floating interest rate (1-month EURIBOR) was fixed at levels of 1.995% and 2.2%.
As of 30 September 2025, the fund's interest coverage ratio (ICR) was 3.9 (30 September 2024: 3.0), with the improvement primarily driven by the decrease in EURIBOR. Due to the periodic repayments of loans secured by the Group's real estate investments and the low level of financial leverage, the fund's management plans to refinance loans at the beginning of 2026 to increase the fund's capacity to pay dividends.
Share information
As at 30 September 2025, the registered share capital of EfTEN Real Estate Fund AS was EUR 114,403 thousand (31.12.2024: same). The share capital consisted of 11,440,340 shares (31.12.2024: same), each with a nominal value of EUR 10 (31.12.2024: same).
The net asset value (NAV) per share of EfTEN Real Estate Fund AS was EUR 20.44 as of 30 September 2025 (31.12.2024: EUR 20.37 reflecting increased by 0.3% during the 9-month period of 2025. Excluding dividend distributions, the fund's NAV would have increased by 5.1% over the same period.
The shares of EfTEN Real Estate Fund AS have been traded on the main list of Nasdaq Tallinn since December 2017. As of 30.09.2025, members of the fund's council and management board and their related persons owned 32.18% of the shares.
CONSOLIDATED STATEMEMT OF COMPREHENSIVE INCOME
| III quarter | 9 months | |||
| 2025 | 2024 | 2025 | 2024 | |
| € thousands | ||||
| Revenue | 8,359 | 8,006 | 24,427 | 23,924 |
| Cost of services sold | -383 | -473 | -1,278 | -1,232 |
| Gross profit | 7,976 | 7,533 | 23,149 | 22,692 |
| Marketing costs | -143 | -111 | -471 | -489 |
| General and administrative expenses | -897 | -860 | -2,844 | -2,679 |
| Profit / loss from the change in the fair value of investment property | 0 | -457 | 546 | -1,911 |
| Other operating income and expense | 41 | 1 | 19 | 87 |
| Operating profit | 6,977 | 6,106 | 20,399 | 17,700 |
| Profit / loss from joint ventures | 138 | 83 | 167 | -171 |
| Interest income | 22 | 51 | 140 | 216 |
| Other finance income and expense | -1,630 | -2,171 | -5,172 | -6,644 |
| Profit before income tax | 5,507 | 4,069 | 15,534 | 11,101 |
| Income tax expense | -256 | -215 | -2,091 | -997 |
| Net profit for the reporting period | 5,251 | 3,854 | 13,443 | 10,104 |
| Total comprehensive income for the period | 5,251 | 3,854 | 13,443 | 10,104 |
| Earnings per share | ||||
| - basic | 0.46 | 0.36 | 1.18 | 0.93 |
| - diluted | 0.46 | 0.36 | 1.18 | 0.93 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| 30.09.2025 | 31.12.2024 | |
| € thousands | ||
| ASSETS | ||
| Cash and cash equivalents | 16,107 | 18,415 |
| Current deposits | 0 | 2,092 |
| Receivables and accrued income | 1,204 | 2,055 |
| Prepaid expenses | 377 | 138 |
| Total current assets | 17,688 | 22,700 |
| Long-term receivables | 253 | 154 |
| Shares in joint ventures | 2,127 | 1,960 |
| Investment property | 383,268 | 373,815 |
| Property, plant, and equipment | 157 | 134 |
| Total non-current assets | 385,805 | 376,063 |
| TOTAL ASSETS | 403,493 | 398,763 |
| LIABILITIES AND EQUITY | ||
| Borrowings | 46,237 | 30,300 |
| Derivative instruments | 69 | 0 |
| Payables and prepayments | 2,720 | 3,245 |
| Total current liabilities | 49,026 | 33,545 |
| Borrowings | 108,348 | 119,120 |
| Other long-term liabilities | 2,130 | 1,928 |
| Deferred income tax liability | 10,172 | 11,097 |
| Total non-current liabilities | 120,650 | 132,145 |
| TOTAL LIABILITIES | 169,676 | 165,690 |
| Share capital | 114,403 | 114,403 |
| Share premium | 90,306 | 90,306 |
| Statutory reserve capital | 4,156 | 2,799 |
| Retained earnings | 24,952 | 25,565 |
| TOTAL EQUITY | 233,817 | 233,073 |
| TOTAL LIABILITIES AND EQUITY | 403,493 | 398,763 |
Marilin Hein
CFO
Phone +372 6559 515
E-mail: marilin.hein@eften.ee
