Established as an Estonian limited partnership (usaldusfond), EfTEN Real Estate Fund 4 is a 10-year closed-end fund designed for institutional investors. It will invest in cash flow generating commercial real estate properties in the Baltics. The fund is not offered publicly. The fund will continue the successful investment strategy of EfTEN Kinnisvarafond II AS, providing to institutional investors exposure to the Baltic real estate market by investing in large scale commercial cash flow properties such as office, retail and logistics. The investment strategy of the fund does not allow the fund manager to take development risk. Minimum single investment is set to €15 million. To complete the foundation of the fund, it must be registered in the commercial register.
“The strategy of the new fund is to invest mainly in core/core+ properties with good location, moderate risk and proven rental cash flows, which is similar to the strategy of our second fund that concluded the investment period by achieving its target size. The investment strategy of our third fund EfTEN Real Estate Fund III AS, listed on Nasdaq Tallinn, is clearly more opportunistic, the size of an average investment is lower and hence it’s not competing with the new fund”, commented Mr Viljar Arakas, the CEO of EfTEN Capital AS.
Mr Arakas added: “The target size of the new fund has been set to €120 million euro of equity. We have 18 months from the first closing to reach the target size, therefore it is rather extraordinary that the first closing was completed on such high level of 80%. On one hand, this shows a continuing interest towards the asset class, on the other hand it demonstrates trust to the work we have done and the new plans we have“. The investor pool includes Baltic pension funds, life and non-life insurance companies and the fund manager’s partners.
EfTEN Real Estate Fund 4 may use up to 60% of bank loans which means the total fund size may increase up to €300 million. “While €15 million is the minimum ticket, then in reality we want to select properties in the range of €30-50 million market value”, Arakas commented. The establishment of the fund was advised by the law office Deca Legal.