Net asset value of EfTEN Real Estate Fund III AS as of 30.06.2020 and preliminary financial results for the first half of the year
The net asset value (NAV) of EfTEN Real Estate Fund III AS as of 30.06.2020 was 15.95 euros. The net asset value of the EPRA share (net book value excluding deferred income tax liability and fair value of interest rate derivatives) as of 30.06.2020 was 17.00 euros. NAV decreased by a total of 8.4% in June, including 4.1% due to the announcement of dividends at the general meeting in June and 5.1% due to the economic uncertainty as a result of the Covid-19 on the valuation of investment properties.
The Fund's consolidated sales revenue in June totaled 817 thousand euros (May: 816 thousand euros) and EBITDA was 640 thousand euros (May: 704 thousand euros). The lower EBITDA in June is mainly related to the support for expenses received a month earlier in Lithuania and slightly higher overheads. The Fund's consolidated cash balance increased by 9 thousand euros in June, including the principal payments that were paid in June due to the earlier agreed loan grace periods. The termination of the grace periods was a condition for excepting the dividend payments with the fund's lenders.
In the first half of 2020, the fund earned a total of 4.9 million euros in consolidated sales revenue (H1 2019: 4.6 million euros) and the fund’s EBITDA was 3.8 million euros (H1 2019: 3.6 million euros). Of this EBITDA growth, 0.3 million euros is related to the addition of airBaltic's office building and Kekava logistics building and 0.2 million euros is related to the addition of newly built Tähesaju Hortes rental income into fund’s investment portfolio. EBITDA has decreased by 0.2 million euros from the Covid-19 crisis and the resulting temporary discounts, compared to the previous year. All temporary discounts will end no later than September of this year. According to the fund's management, the negative economic impact of the Covid-19 crisis on the fund's results is smaller than initially expected, partly due to the well-diversified real estate portfolio of EfTEN Real Estate Fund III AS by sectors and countries, strong tenant base, good capitalization and conservative financing strategy.
The Fund's cash and short-term deposits decreased by a total of 8.1 million euros in the first half of 2020, of which 8.6 million euros are related to the acquisitions of subsidiaries owning the airBaltic office building and Kekava logistics building in Riga and 0.5 million euros is related to the additional investments into existing projects. Changes in the Fund's working capital in the first half of 2020 have been negative in the total amount of 0.6 million euros, including, among other things, an increase in debt receivables in the amount of 0.2 million euros. At the end of June, fund’s overdue invoices totaled to 0.3 million euros and are largely related to the delay in reimbursing the rent payments requested by the tenants of the Saules Miestas shopping center from the Lithuanian state.
In June, Colliers International conducted a regular valuation of the fund's real estate portfolio, which this time is even more conservative than before due to the economic uncertainty arising from Covid-19. While yields as an input to valuations did not change for any investment property, the discount rates for most properties have risen by 0.3 percentage points due to the expected rise in interest rates. However, the lower cash flow forecast had an even more significant effect on the values of real estate investments, where Colliers International rental income estimates during 1 to 1.5 could be expected to decrease by approximately 4% from its normal level for some properties. Overall, the value of the fund's real estate portfolio decreased by 3.99 million euros (3.1%) as a result of valuations, which made the fund's net profit for the first half of 2020 negative. The fund's loss in the first half of 2020 totaled 1,065 thousand euros.
The volume of consolidated assets of EfTEN Real Estate Fund III AS as of 30.06.2020 was 137.7 million euros (31.12.2019: 132.8 million euros) and equity was 67.4 million euros (31.12.2019: 71.17 million euros).
Annex: EfTEN Real Estate Fund III AS portfolio valuation condensed report by Colliers International, July 1st, 2020.
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