Baltic, Estonia, Financial Services, Funds, Good for Business, Real Estate

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 company told the stock exchange.

The fund's cash and short-term deposits decreased by a total of 8.1 mln euros in the first half of 2020, of which 8.6 mln euros are related to the acquisitions of subsidiaries owning the airBaltic office building and Kekava logistics building in Riga and 0.5 mln 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 mln euros, including, among other things, an increase in debt receivables in the amount of 0.2 mln euros. At the end of June, the fund’s overdue invoices totaled 0.3 mln 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 mln euros or 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 mln euros.