Overview of EfTEN
EfTEN Capital AS is a fund management company focusing on commercial real estate investments in the Baltic States. EfTEN Capital AS has been granted a management license by the decision of the Board of the Financial Supervision Authority on 14.01.2009, and an alternative fund management license by a decision on 20.11.2014.
- Established: 2008
- Managed property funds: 6
- Tenants: >1 300
- Investors: >12 000 o/w 16 institutional
- Managed assets (GAV): 1,1bn EUR
- Managed properties: >60
- Employees: ca. 60 (Est, Lat, Lit)
efTEN currently manages eight funds (Dropdown)
- EfTEN Kinnisvarafond II ASÂ (founded in 2015), targeted mainly for institutional investors. The fund follows core and core plus investment strategy. Funds investment region is Baltic States capitals.
- EfTEN Real Estate Fund ASÂ (founded in 2015) is a public closed real estate fund, targeted mainly for retail investors. The funds investment strategy is value added and opportunistic. Funds investment region is Baltic States.
- Usaldusfond EfTEN Real Estate Fund 4Â (founded in 2018) is alternative, closed-end investment fund. The fund follows core and core plus investment strategy.
- Usaldusfond EfTEN Real Estate Fund 5Â (founded in 2021) is alternative, closed-end investment fund. The fund follows core and core plus investment strategy.
- EfTEN Residential Fund usaldusfond (founded in 2020) is alternative, closed-end investment fund. The fund invests in real estate residential in the Baltic States.
- Usaldusfond EfTEN Special Opportunities Fund (founded in 2023) is alternative, closed-end investment fund. The fund follows core and core plus investment strategy.
- EfTEN United Property Fund
- PE FoF usaldusfond
efTEN Funds Key Assets (Dropdown)
efTen Core Team (Dropdown)
Viljar Arakas - Fund Manager / EfTEN Capital co-founder and CEO since 2008; Fund manager for all EfTEN funds. Former CEO of Arco Vara, leading real estate company in the Baltics; CEO of Arco Transport (22 years industry experience)
Tõnu Uustalu - Investment Manager / EfTEN Capital co-founder and CIO since 2008; Fund manager for all EfTEN funds Former portfolio and investment manager of East Capital; SEB Corporate Banking and RE financing (28 years industry experience)
Maie Talts - Head of Legal / Co-Founder and Head of Legal since 2008 Former lawyer and head of the legal team of Arco Vara, leading real estate company in the Baltics (27 years of legal experience)
Marilin Hein - CFO / Co-Founder and CFO since 2008 Former Chief Accountant of Arco Vara, leading real estate company in the Baltics; Chief Accountant at legal firm Luiga Mody Hääl Borenius (28 years of financial experience)
Viktors Savins - Head of LV / EfTEN Latvia Country Manager since 2013 Former Partner and CEO of Arco Development and SIA Arco Real Estate’s real estate brokerage, valuation and property advisory unit in Latvia (22 years industry experience)
Laurynas Žilys - Head of LT / EfTEN Lithuania Country Manager since 2015 Former partner of CREalty advisors; Head of Investment Department at Colliers Lithuania (19 years industry experience)
Special Opportunities Fund
EfTEN Capital is launching a new opportunistic strategy (the first one in the Baltics) fund: efTEN Special Opportunities Fund
- Fund type: Estonian domiciled close-end limited partnership (usaldusfond)
- Term: 5+1+1 years / 2 years investment period / Holding and divesting period: 3+1+1 years
- Fees:
- Management fee: 1,5% on invested capital (per annum)
- 0% on uncalled capital
- Performance fee: 25% after full divestment
- Hurdle rate: 10% per annum
- Target return: 15%+pa (gross) / 11%+pa (net)
- Risk profile limits:
- Size of singe asset at purchase: max 25% of committed capital (max ca 5mio after 1st close)
- Land plots: max 25% of committed capital
- Leverage: leverage use is minimal and will primarily be used as a refinancing option when asset is brought out of distress
- GP subsidiary of EfTEN Capital
- Investing in assets and real estate projects in distress and/or additional capital need for the continuation of business plan
- Where applicable, enhanced sustainability characteristics
- Structuring of investments: equity and debt capital (preferably a hybrid)
- Hands on approach and controlling the stake
efTEN Capital funds and historical track record
efTEN Track Record with distressed assets
In addition EfTEN Capital purchased in Dec 2008 a portfolio of 14 distressed or semi-distressed assets (primarily located in secondary towns in Estonia). The portfolio was successfully brought out of stress and exited the result of 12% annualized return since portfolio’s lifetime (2004-2023)
Investment Case
- Availability of capital – real estate sector is under stress globally and no new foreign capital is currently seen to enter the Baltic property market. It has already become significantly more difficult to roll-over debt financing as banks are tightening credit standards. EfTEN Capital has started to receive an increasing number of offers to become a “financing partner”.
- Investment case - for investors with little liquidity constraints current situation will open- up opportunities to purchase real estate assets in distress or in additional capital need. This can be executed either through equity or through providing project debt financing.
- Management – EfTEN Capital, as the most successful and largest real estate manager in the Baltics, is best positioned (sourcing, deal making, restructuring, exiting, etc) to exploit the arising opportunities and deliver on them.
Investment process
- Sourcing of investments: personal relations, open offers, contacts with banks
- IC members
- Preliminary analysis: short memo
- IC (unanimous) decision to proceed/not to proceed
- Extensive DD-s
- Legal DD – internal or external (depending on the nature of investment)
- Technical DD – generally external
- Financial DD – internal
- IC unanimous decision
- Follow-up
- IC members meet weekly via conference calls and physically at least once a quarter to discuss the status of the investments made
- Exit: personal relations, open offers
- IC (unanimous) decision to dispose/not to dispose
Sustainability
- EfTEN Special Opportunities Fund will promote ESG aspects in acquired assets (article 8) where applicable
- Gathering of sustainability data
- Sustainability performance assessed and (short-term) sustainability plan outline
- Sustainability principles in maintenance and CAPEX where relevant
- Green leases in tenant lease agreements where relevant
- EfTEN Fund 4 and 5 are article 8 and GRESB assessed
- EfTEN 4 received 5 stars in 2023 (up from 4 stars in previous years)
- ETEN 5 will be assessed next year
- EfTEN Special Opportunities Fund has the exclusion list of sectors and assets where it is not investing in
efTEN Special Opportunity Fund Sample Transactions
Transaction 1
Overview
Volume: up to 58m EUR
Expected equity (deal size): up to 17m EUR (ca 2m EUR per property)
Expected bank financing: 60% of development cost
Deal Structure
Fixed rate loan (2nd rank mortgage): 15% p.a.
Equity upside: on exit
Project Details
Development cost: 1 750 EUR/sqm
Average rent: 13,0 EUR/sqm (triple net)
Exit yield: 7,5%...8,5% (depending on location)
Tenants (signed): Maxima, IKI, RIMI, Pepco, Sinsay, Deichman
Retail centre cash-flow forecast (mio EUR)
Sample Transaction 2
Overview
GLA: 7300 sqm
Expected equity (deal size): 3…4m EUR
Development cost: 13m EUR
Project details:
Development cost: 1 770 EUR/sqm
Average rent: 13,5 EUR/sqm (triple net)
Exit yield: 7,5%...8,0%
Exit price: 15,5-16,5m EUR
Tenants (signed): Cognizant
Sustainability impact: potential effect on bank financing
Deal Structure
Fixed rate loan (2nd rank mortgage): 12% p.a.
Equity upside: on exit
Sample Transaction 3
Overview
Wise, London listed fully profitable EST founded fintech
Developer: Invego OĂś
Development: A+ class 30k m2 office (2 buildings)
Development cost: ca 51mio EUR
Terms:
Rent agreement: 10y unbreakable with Wise
Annual exp NOI: 4,9mio EUR (ca 16 EUR/m2 for upper ground office areas)
Wise invests 10mio EUR into fit outs – compensates upon moving-in
Banks are willing to lend 10mio EUR less as compared to autumn 2022 indications
Developer is looking for 10m EUR 1,5y bridge
