EfTEN Real Estate Fund III third public offering of shares was oversubscribed 3.8 times
A public closed-end alternative investment fund EfTEN Real Estate Fund III AS’ third public offering of shares, with maximum volume of 6.3 million euros, was oversubscribed 3.8 times. In total, 23.8 million euros worth of shares were subscribed, which is the record to date. Offering was available to the fund’s current shareholders exclusively and from the total 300 shareholders, 75 percent subscribed.
According to EfTEN Real Estate Fund III AS’ fund manager Viljar Arakas, during the times when commercial real estate market is showing signs of overheating, it is important to keep head cool. „Our clear incentive is to serve the interests of investors not fund manager, thus we decided to organise the public offering of shares in more modest volume and exclusively for our existing investors. We raise capital only for the projects pre-selected with appropriate risk and return profile,“ added Arakas.
In the future, the Fund will be listed on Baltic Stock Exchange, according to Arakas. “Listing the Fund on stock exchange has been the plan since the Fund was established in 2015 and we have been operating in that spirit from the beginning. Today, we are already making preparations accordingly and the current plan is to list the Fund on stock exchange, making shares easily tradeable on the secondary market,” added Arakas.
The capital raised with the third public offering will be invested into newly built Selver grocery store to be opened in Laagri, Tallinn and Hortes gardening centre also located in Laagri. Additionally, extensive reconstruction work at DSV logistics centre in Riga is planned, as well as refreshing and renovating Saules Miestas shopping centre’s façade.
The subscription period of EfTEN Real Estate Fund III AS’ third public offering started April 18 and ended May 2, 2017. In total, 500 000 shares with price of 12.5431 euros per share will be issued. The total demand of the shares exceeded two previous emissions’ demand, despite the fact that the current offering was available for the fund’s existing shareholders only. Public offering of shares was organised by fund manager EfTEN Capital AS and subscription by Estonian Central Securities Depository’s account operators. The total cost of organising public offering of shares is approx. 0.1% of the total volume of the public offering, not exceeding 6 000 euros.
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, Ulonu business centre in Vilnius and Laisves 3 office building, also 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.
Fund’s goal is to provide investors stable dividend yield and capital growth. From annual free cash flow the Fund pays 80 percent out in dividends. Annual expected dividend rate is 4 – 8 percent. 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 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 percent. 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.