Baltic, Financial Services, Funds, Real Estate

The minimum and maximum number of shares offered that can be subscribed for has not been established. Existing shareholders of the fund, meaning persons entered in the list of shareholders of the fund as of May 7, 2019 COB of Nasdaq CSD, have a pre-emptive right to subscribe for the new shares in proportion to the sum of the nominal value of their existing shares, Eften Real Estate Fund III told the stock exchange.

Existing shares are not sold in the offer.

The offering price of each new share is 16 euros, of which 10 euros is the nominal value of the share and 6 euros the issue premium. On Monday, the share of Eften Real Estate Fund III closed at 17.4 euros on Tallinn stock exchange. 

"Eften Real Estate Fund III will use the equity collected in the share issue to pay back the bridge financing related to the acquisition of ABC Motors sales and service center in Tallinn, in the amount of 1.5 mln euros, as well as for the construction of Hortes garden center at Tahesaju industrial park in Tallinn and in vast majority for new investments in Baltic commercial properties," said Viljar Arakas, member of the management board of Eften Real Estate Fund III AS.

According to Arakas, the fund is investing only in properties with a stable cash flow, the emphasis being on the word "stable."

"We prefer commercial buildings with a strong tenant base, where we see long-term good performance, not only over the next few years. I believe that we can use the equity collected in the share issue for acquiring and developing suitable commercial spaces," Arakas said.

Retail properties at present constitute 42%, logistics and production spaces 30% and office buildings 28% of the investment portfolio of Eften Real Estate Fund III. In a breakdown by country, 68% of the fund's portfolio investments are located in Lithuania, followed by Estonia with 24% and Latvia with 8%.

The investments in the fund's portfolio include DSV logistics centers in Tallinn, Riga and Vilnius, a sales and service center of ABC Motors in Tallinn, two Hortes garden centers and the Laagri Selver retail center in Tallinn, Evolution business center in Vilnius, Saules Miestas retail center in the Lithuanian city of Siauliai, as well as Laisves 3 and Ulonu office buildings in Vilnius.

According to the dividend policy, the fund will pay a dividend equaling 80% of the fund's free cash flow in the previous business year. For 2018, the fund paid out 100% of its free cash flow, or 3.1 mln euros, meaning a net dividend of 0.95 euros per share.

The new shares can be subscribed for at all Estonian commercial banks. According to the proportional pre-emptive subscription right, each existing shareholder can subscribe for a number of shares equaling up to 31 % of the shares currently held by them. The new offered shares are eligible for dividend starting from the business year 2019.

The fund's shareholders decided about the issue of new shares at their annual general meeting on April 17 and the Estonian Financial Supervision Authority registered the share issue prospectus on May 13. The new shares will be listed in the Baltic Main List of Nasdaq Baltic and trading in the shares will start presumably on June 20.