GROUP CEO'S REVIEW
2025 was a year of stabilisation and moderate recovery in the Estonian real estate market. Property prices increased slowly and transaction activity improved, particularly following the downturn in 2023-2024. The decline and stabilisation of Euribor improved lending conditions and brought buyers back to the market. As a result, the number of transactions in new developments in Tallinn increased, although it remained below forecasts. Economic growth was modest, which kept the market cautious; however, the overall picture improved compared to the downturn of previous years. If the macroeconomic environment remains stable and interest rates begin to decline, moderate market growth can be expected in 2026, particularly in the new development segment.
The past year was one of active development and strategic decisions for Arco Vara. During the year, we focused on launching new projects, advancing existing developments, and strengthening the company's financial and support structures. Despite a volatile economic environment, we consistently implemented our strategy to ensure sustainable long-term growth and competitiveness.
During the year, we expanded our development portfolio by acquiring the Spordi and Luther projects, increasing the company's development volume to 157,318 m² (+72,590 m²). Construction works commenced at the Spordi project, while in the Luther quarter we focused on developing the concept and updating the budget to ensure optimal future implementation. The Soodi development in the Kodulahe quarter also moved to the next stage, with a building permit obtained and construction works commenced. A significant part of the year was dedicated to activities related to existing projects. In the Bulgarian development project, we focused on finding buyers and partners.
We successfully completed a share issue and the company's first public bond offering, raising a total of EUR 15 million.
Organisational development was also a key focus. During the year, we recruited new team members to support the implementation of Arco Vara's projects. We strengthened the finance, development, sales and marketing teams to support the company's growing development volumes.
The first three quarters of the year were slightly profitable; however, lower-than-expected sales volumes in the fourth quarter, also impacted by a limited number of available units, resulted in a loss for the full year.
Rannakalda development: During the year, 18 homes were sold. By the end of 2025, 105 out of 113 apartments and commercial units 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 works began on 30 June. By the end of 2025, 22 out of 66 apartments and commercial units had been sold under preliminary purchase agreements. The project is attractive to young families, investors and more demanding clients due to its good location and well-designed layouts.
Spordi development: Construction also commenced in June. By the end of 2025, 16 out of 56 homes had been sold under preliminary purchase agreements. The Spordi development complements 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: After the reporting period, on 19 January 2026, a public discussion was held and the process has reached the final stages of adopting the detailed spatial plan. This is a strategically important project that creates the basis 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: During the year, two out of five remaining homes were 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 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. 2025 was a year of intensive work and several important decisions. We are confident that the steps taken will create a strong foundation for the next stages of development and support Arco Vara's long-term sustainable growth.
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.
During 2025, 48 apartments were sold, 28 under preliminary purchase agreements and 20 under real right contracts. For comparison, during 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, 8 apartments and 1 commercial premises were completed and held in inventory. As of 31 December 2024, 28 apartments and 1 commercial premise were completed and held in inventory.
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 Luther 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 Luther 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 | 2025 | 2024 |
| Revenue from sale of own real estate | 7,195 | 7,145 |
| Revenue from rendering of services | 489 | 332 |
| Total revenue | 7,685 | 7,477 |
| Cost of sales | -5,727 | -5,707 |
| Gross profit | 1,957 | 1,770 |
| Other income | 5 | 7 |
| Marketing and distribution expenses | -447 | -551 |
| Administrative expenses | -1,122 | -1,127 |
| Other expenses | -197 | -31 |
| Operating profit | 195 | 69 |
| Financial costs | -563 | -640 |
| Profit/ loss before tax | -368 | -572 |
| Income tax | -111 | -52 |
| Net profit/ loss for the period | -479 | -624 |
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 | 4,180 | 234 |
| Payables and deferred income | 8,560 | 4,487 |
| Warranty provisions | 347 | 127 |
| Total current liabilities | 13,087 | 4,848 |
| Loans and borrowings | 36,283 | 14,981 |
| Payables and deferred income | 503 | 0 |
| Total non-current liabilities | 36,786 | 14,981 |
| TOTAL LIABILITIES | 49,873 | 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
