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EfTEN Real Estate Fund III announces public offering of shares
Founded in 2015 by fund manager EfTEN Capital, a public closed-end alternative investment fund EfTEN Real Estate Fund III AS announces the third public offering of shares with maximum volume of 6,3 million euros. Unlike previous two public offerings in 2015 and 2016 when 13,3 and 11 million euros were raised respectively, this time offering is available to current shareholders exclusively. Public offering of shares is organised by fund manager EfTEN Capital AS and subscription is organised by Estonian Central Securities Depository’s account operators.
Subscription period is from April 18 to May 2, 2017. In total 500 000 shares will be issued with price of 12,5431 euros per share.
According to EfTEN Real Estate Fund III AS’ fund manager Viljar Arakas, whereas there is capital waiting to be invested, the Baltic commercial real estate market is currently lacking of investment objects with appropriate risk and return profile for the Fund, and therefore the decision was made to raise significantly less capital this time and make public offering available for existing investors exclusively.
“2016 was a record-breaking year for us – we acquired five properties with total value of 140 million euros. As of today, the real estate prices have increased, yields decreased and therefore risks in investing into new properties have risen considerably. We have looked into approximately a hundred projects all over the Baltics and carefully selected only two attractive properties where the capital to be raised with third public offering will be invested into – newly built Selver grocery store to be opened in Laagri, Tallinn and Hortes gardening centre that is also located in Laagri. In addition, we plan extensive reconstruction work at DSV logistics centre in Riga,” added Arakas.
Fund’s goal is to provide investors stable dividend yield and capital growth. From annual free cash flow the Fund pays 80% out in dividends. Annual expected dividend rate is 4 – 8%. For 2016 shareholders received net dividend of 63 cents per share – in total 1 502 716 euros (in 2015, 29,7 cents per share).
The capital raised with the first two public offerings of shares in 2015 and 2016 has been invested in the following investment objects in the Baltic States: Saules Miestas, shopping centre situated in the heart of Lithuanian city Šiauliai; Ulonu business centre and Laisves 3 office building in Vilnius; and DSV logistic centres in Riga, Vilnius and Tallinn. As of March 31, 2017 the Fund’s gross asset value is 76,3 million euros, with 29,9 million euros of owner’s equity.
The Fund’s leverage, according to prospectus confirmed by Estonian Financial Supervision Authority, is limited to a maximum of 65 percent of the total value of real estate acquisition value. Annual expected equity return is 15%. EfTEN Real Estate Fund III AS is not a guaranteed fund.
EfTEN Real Estate Fund III AS is the only fund, managed by EfTEN Capital, that makes investments to the large-scale commercial real estate projects accessible to retail investors. The Fund invests in commercial properties and limited-scope development (retail, office, logistics and hotels) or related securities in Estonia, Latvia and Lithuania. The fund is suitable for investors with a long-term investment horizon who want to benefit from the regional commercial real estate market outlook, attractive returns from stable and predictable cash flows and moderate capital growth.
Regulated by Estonian Financial Supervision Authority, EfTEN Real Estate Fund III AS term is 10 years, divided into 3 year investment period, 5 years holding and 2 years for exit. The Fund will potentially be listed in Baltic Stock Exchange market after investments period.