GROUP CEO'S REVIEW
The fourth quarter of 2025 in the Estonian real estate market was overall stable, but fell short of the expectations set at the beginning of the year. The market was no longer in a downturn phase; however, a clear growth cycle had not yet begun either. Rather, it was a period of stabilization, during which both buyers and sellers were adapting to the new economic environment and waiting for clearer signals regarding interest rates and the overall improvement of economic conditions.
The fourth quarter did not bring the anticipated stronger seasonal recovery. Buyers remained cautious, and decision-making processes became longer, which was reflected in extended sales periods and more modest transaction volumes. Increased price sensitivity was noticeable in the market, and buyers compared offers more thoroughly than before.
The sales pace and the number of interested buyers were weaker than forecasted. Although prices did not decline significantly, the sales pace remained slow, and purchase decisions were often postponed. In order to remain competitive, more flexible payment terms, campaigns, or additional value-added benefits had to be offered to maintain buyer interest and conclude transactions.
For Arco Vara, the fourth quarter was an active and development-rich period, during which we focused both on launching new projects and on the consistent advancement of existing developments. We also invested considerable effort in preparing the pre-sales of the Luther project, developing its concept, and preparing it for the construction phase.
As the sales targets set for the fourth quarter were not achieved, the quarterly results were more modest than expected and remained below the same period last year.
Rannakalda development: Four homes were sold in the fourth quarter. By the end of 2025, 105 out of 113 apartments and commercial units in the project had been sold. The goal was to sell all remaining units by the end of 2025; however, some apartments remained unsold, and their sales will continue in 2026.
Soodi 6 development: Construction began on 30 June 2025. In the fourth quarter, five preliminary purchase agreements were signed. By the end of 2025, a total of 22 out of 66 apartments and commercial units had been sold under preliminary agreements. The project is attractive to young families, investors, and more demanding clients, primarily due to its good location and well-designed, functional layouts.
Spordi development: Construction also commenced in June. In the fourth quarter, four preliminary purchase agreements were signed. By the end of 2025, 16 out of 56 homes had been sold under preliminary agreements. The Spordi development enhances Arco Vara's portfolio with an excellent location in the Kristiine residential district, an area with limited new developments but strong demand for housing. The project incorporates modern and smart solutions.
Arcojärve development: The detailed spatial plan was adopted on 15 October. This is a strategically important project that creates a foundation for further investments in new inner-city developments.
Bulgaria development: Negotiations regarding the Bulgarian subsidiary are ongoing, and relevant decisions are planned in the near future.
Kuldlehe development: In December, the fourth apartment in the building was sold. Only the last apartment remains available in the project, whose exclusive character and limited availability maintain the development's strong position in Tallinn's premium segment.
Luther development: Pre-sales of the first phase commenced in December. Design works and preparations for the start of construction are ongoing.
Arco Vara remains focused on developing high-quality and sustainable living environments and on providing the best home-buying experience. Our mission is to create modern, sustainable, and desirable living environments where clients can shape their dream homes, and our vision is to be the first choice for homebuyers.
KEY PERFORMANCE INDICATORS
The Group's revenue for the 12 months of 2025 amounted to EUR 7,685 thousand, which is EUR 208 thousand higher than the revenue for the 12 months of 2024.
For the 12 months of 2025, the Group recorded an operating profit (EBIT) of EUR 195 thousand and a net loss of EUR 479 thousand. For the 12 months of 2024, the Group recorded an operating profit of EUR 69 thousand and a net loss of EUR 624 thousand.
In Q4 2025, a total of 14 apartments were sold in the Group's development projects, including 9 under preliminary purchase agreements and 5 under real right contracts. During the full year of 2025, 48 apartments were sold, 28 under preliminary purchase agreements and 20 under real right contracts. For comparison, in Q4 2024, 14 apartments were sold in the Group's development projects (9 apartments under real right contracts and 5 under preliminary purchase agreements). During the full year of 2024, a total of 30 apartments and 3 commercial units were sold (22 apartments and 1 commercial unit under real right contracts and 8 apartments and 2 commercial units under preliminary purchase agreements).
As of 31 December 2025, the total assets of the Group more than doubled compared to 31 December 2024. The main reason for the increase in total assets was the acquisition of new development projects, including the Luhteri Quarter and the Spordi 3a/3b development project.
The Group's net loan position (net debt) as of the end of 2025 amounted to EUR 37,649 thousand, which is EUR 23,012 thousand higher compared to the end of the same period last year. The main reason for the increase in indebtedness was the acquisition of the Luhteri Quarter, which was partially financed with a bank loan. In addition, in the third quarter of 2025, bonds in the amount of EUR 15,000 thousand were issued. As of 31 December 2025, the weighted average interest rate of the Group's interest-bearing liabilities was 8.90%.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| In thousands of euros | 12 M 2025 | 12 M 2024 | Q4 2025 | Q4 2024 |
| Revenue from sale of own real estate | 7,195 | 7,145 | 1,935 | 3,273 |
| Revenue from rendering of services | 489 | 332 | 125 | 118 |
| Total revenue | 7,685 | 7,477 | 2,060 | 3,390 |
| Cost of sales | -5,727 | -5,707 | -1,776 | -2,857 |
| Gross profit | 1,957 | 1,770 | 284 | 534 |
| Other income | 5 | 7 | 2 | 7 |
| Marketing and distribution expenses | -447 | -551 | -119 | -146 |
| Administrative expenses | -1,122 | -1,127 | -402 | -156 |
| Other expenses | -197 | -31 | -192 | -13 |
| Operating profit | 195 | 69 | -427 | 226 |
| Financial costs | -563 | -640 | -168 | 46 |
| Profit/ loss before tax | -368 | -572 | -594 | 273 |
| Income tax | -111 | -52 | -98 | -52 |
| Net profit/ loss for the period | -479 | -624 | -692 | 221 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| In thousands of euros | 31 December 2025 | 31 December 2024 |
| Cash and cash equivalents | 2,784 | 1,720 |
| Receivables and prepayments | 6,420 | 5,690 |
| Inventories | 74,127 | 29,170 |
| Total current assets | 83,331 | 36,580 |
| Receivables and prepayments | 18 | 18 |
| Investment property | 2,296 | 2,296 |
| Property, plant and equipment | 551 | 622 |
| Intangible assets | 41 | 52 |
| Total non-current assets | 2,905 | 2,988 |
| TOTAL ASSETS | 86,236 | 39,568 |
| Loans and borrowings | 180 | 234 |
| Payables and deferred income | 9,063 | 4,487 |
| Warranty provisions | 347 | 127 |
| Total current liabilities | 9,590 | 4,848 |
| Loans and borrowings | 40,283 | 14,981 |
| Total non-current liabilities | 40,283 | 14,981 |
| TOTAL LIABILITIES | 51,552 | 19,829 |
| Share capital | 12,158 | 7,272 |
| Share premium | 16,399 | 3,835 |
| Statutory capital reserve | 2,011 | 2,011 |
| Other reserves | 28 | 28 |
| Retained earnings | 5,767 | 6,594 |
| TOTAL EQUITY | 36,363 | 19,739 |
| TOTAL LIABILITIES AND EQUITY | 86,236 | 39,568 |
Darja Bolshakova
CFO
Arco Vara AS
www.arcovara.com
