EfTEN Real Estate Fund AS: Strong Performance Amid Challenges, Dividend Focus

EfTEN Real Estate Fund AS (EfTEN) reported unaudited results for the fourth quarter and 12 months of 2024, demonstrating resilience and growth despite a challenging economic environment. The fund's portfolio expanded with two new logistics properties, and plans are in place to grow in the care home segment. EfTEN is primarily a dividend share, aiming to distribute 1.1 euros of dividends per share for 2024, corresponding to an attractive 5.7% yield based on recent closing share prices.



Financial Overview
EfTEN's consolidated sales revenue for the fourth quarter of 2024 was 8.314 million euros, an increase of 211 thousand euros (2.6%) compared to the fourth quarter of 2023. For the first 12 months of 2024, consolidated sales revenue totalled 32.238 million euros, an increase of 421 thousand euros (1%) compared to the previous year. The Group's net rental income for the same period was 29.977 million euros, i.e. 369 thousand euros more than in 2023. The Group's net profit for the same period was 13.564 million euros (2023: 1.0 million euros).



Investment Portfolio
As of the end of 2024, the Group has 36 commercial real estate investments, with a fair value at the balance sheet date of 373.815 million euros and an acquisition cost of 370.561 million euros. In addition to the investment properties owned by the Fund's subsidiaries, the Group's 50% joint venture owns the Palace Hotel in Tallinn, with a fair value of 8.630 million euros as of 31.12.2024.

Investments in 2024
The Group made investments in both new properties and the existing portfolio in 2024, totaling 21.6 million euros. This included the acquisition of a logistics center in Tallinn, Härgmäe 8, by the Group's subsidiary EfTEN Härgmäe OÜ, and a logistics center under development in Tallinn, Paemurru tee 3, by the Group's subsidiary EfTEN Paemurru OÜ. Additionally, the Group invested in the construction of Ermi and Valkla elderly care homes and other projects within the fund’s real estate portfolio.

Vacancy Management and Dividend Strategy
The priority for 2025 is vacancy management, with the portfolio’s total vacancy rate at 2.6% and the office segment vacancy rate at 11.3%. The fund's management plans to refinance several bank loans in the spring of 2025, potentially enabling an increase in the dividend payment to as much as €1.10 per share (net). In 2024, EfTEN generated an adjusted cash flow of €11.108 million, allowing for a gross dividend of €0.7768 per share based on the fund’s dividend policy.



Conclusion
EfTEN Real Estate Fund AS demonstrated strong performance in 2024, with increased rental income and EBITDA despite a challenging economic environment. The fund's expansion into logistics properties and care homes contributes to its overall portfolio diversification, and its dividend-focused strategy offers an attractive yield for investors. With a conservative LTV ratio and strong cash flow, EfTEN is well-positioned to maintain and potentially increase its dividend payouts in the future.