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*Fund Manager’s Commentary**

    During a prolonged period of subdued economic activity, the EfTEN Real Estate Fund AS has steadily improved its financial performance. The fund’s disciplined approach to maintaining low vacancy rates, coupled with successful acquisitions in the elderly‑care and logistics sectors and a decline in interest costs, has boosted free cash flow. Combined with planned refinancing of bank loans, management anticipates proposing a record dividend to shareholders in spring 2026.

    **Occupancy and Rental Income**

    The first signs of higher occupancy appeared in spring and persisted into Q3. The portfolio vacancy rate fell for the second consecutive quarter, reaching 3.6 % at September’s end. In summer, the second phase of the ERM care home in Tartu municipality was completed, and rental income from this property gradually hit its contractual level by August. Additional acquisitions—Hiiu care home (April) and the new phase of Valkla care home—lifted care‑home rental income to 4.7 % in Q3, nearly half of the figure a year earlier. Reduced vacancy and new rental space drove net operating income (NOI) up 5.1 % and EBITDA up 6.3 % versus Q3 2024.

    For the first nine months of 2025, the fund generated potential gross dividends of €0.6666 per share, a 12.6 % increase YoY. With periodic principal repayments and strong leverage ratios, management plans to refinance bank loans early 2026 and propose net dividends of €1.20 per share for 2025—an 8.1 % rise over spring 2025 and 20 % over spring 2024.

    **Interest‑Rate Environment**

    EURIBOR’s two‑year downward trend stalled in Q3. As a further decline seems unlikely, the fund continued its rate‑fixing strategy begun at Q2’s end. In September, the Latvian subsidiary entered a €11.1 million interest‑rate swap at 2.2 % fixed. By Q3’s close, €22.7 million of the fund’s subsidiaries’ loans were covered by swaps, representing 15 % of the consolidated loan portfolio.

    **Financial Performance Overview**

    Consolidated sales revenue for Q3 2025 was €8.359 million (vs €8.006 million in Q3 2024), and €24.427 million for the first nine months (vs €23.924 million in 2024). Q3 revenue rose 4.4 % YoY, nine‑month revenue up 2.1 %. Growth stemmed mainly from new logistics and care‑home investments.

    Consolidated NOI for the first nine months of 2025 was €22.678 million (vs €22.203 million in 2024), a 2.1 % increase. The NOI margin stayed at 93 %, meaning operating costs—including land tax, insurance, maintenance, and marketing—consumed 7 % of revenue.

    Q3 net profit reached €5.251 million (vs €3.854 million in Q3 2024). The rise was driven by higher revenue and lower interest expenses, which fell from €2.171 million to €1.603 million due to the EURIBOR decline. Consolidated nine‑month net profit was €13.443 million (vs €10.104 million in 2024). Interest expenses dropped €1.541 million, a 23 % YoY reduction.

    Adjusted cash flow (EBITDA minus loan repayments and interest) for the nine‑month period was €9.53 million, up 19 % YoY, largely from new acquisitions, developments, and lower interest costs.

    **Assets and Portfolio**

    As of 30 September 2025, total assets were €403.493 million (vs €398.763 million on 31 December 2024), with fair‑value investment properties accounting for 95.0 % (up from 93.7 %). The group owned 37 commercial properties (36 on 31 December 2024) valued at €382.268 million (vs €373.815 million) with an acquisition cost of €379.467 million (vs €370.561 million). Additionally, the group held a 50 % stake in a joint venture owning Tallinn’s Palace Hotel, valued at €8.633 million (vs €8.630 million).

    During the first nine months of 2025, the group invested €8.907 million in new properties and portfolio development. Notable transactions include the acquisition of Hiiu 42 in Tallinn for €4 million, the redevelopment of the building into “Nõmme Südamekodu” (up to 170 residents), completion of Block C at Valkla care home, and phase II construction at Ermi elderly home. The Paemurru logistics centre, acquired in autumn 2024, was completed in April 2025, with an additional €1.743 million invested during H1 2025.

    Rental income for the first nine months of 2025 totaled €23.660 million, a 3 % increase YoY. Vacancy rate stood at 3.6 % (vs 2.6 % on 31 December 2024). The office segment had the highest vacancy at 16.8 %, indicating slower leasing activity.

    **Financing**

    Improved financial capacity led subsidiaries to increase total bank loan exposure by €7.32 million in April 2025. During the first nine months, bank loans financed construction of Valkla care home and Paemurru logistics centre for €2.83 million. EfTEN Hiiu OÜ secured a loan of €3.25 million for the Hiiu 42 reconstruction in April, later increased to €3.65 million in October.

    Over the next 12 months, eleven subsidiaries’ loans will mature, totaling €41.406 million as of 30 September 2025. LTV ratios range from 37 % to 59 %, with stable rental cash flows supporting refinancing. As of 30 June 2025, the weighted average interest rate on loan agreements was 3.95 % (down from 4.89 % on 31 December 2024), and overall LTV stood at 41 % (vs 40 % on 31 December 2024). All loan agreements are floating‑rate; to hedge, two subsidiaries entered swaps covering €22.6 million, fixing 1‑month EURIBOR at 1.995 % and 2.2 %. The fund’s interest‑coverage ratio rose to 3.9 (from 3.0 on 30 September 2024), driven by the EURIBOR decline. Management expects no refinancing obstacles.

    **Share Information**

    As of 30 September 2025, registered share capital remained €114.403 million (unchanged from 31 December 2024), comprising 11,440,340 shares at €10 nominal each. NAV per share was €20.44 on 30 September 2025 (vs €20.37 on 31 December 2024), a 0.3 % increase over nine months; excluding dividends, NAV would have risen 5.1 %. Shares trade on Nasdaq Tallinn’s main list since December 2017. As of 30 September 2025, the fund’s council, board, and related persons owned 32.18 % of shares.

    **Consolidated Statements (excerpt)**

    *Revenue*: €8.359 m (Q3 2025) vs €8.006 m (Q3 2024); €24.427 m (9 mths 2025) vs €23.924 m (9 mths 2024).

    *Gross profit*: €7.976 m (Q3 2025) vs €7.533 m (Q3 2024).

    *Operating profit*: €6.977 m (Q3 2025) vs €6.106 m (Q3 2024).

    *Net profit*: €5.251 m (Q3 2025) vs €3.854 m (Q3 2024); €13.443 m (9 mths 2025) vs €10.104 m (9 mths 2024).

    *EBITDA*: €9.53 m (9 mths 2025) vs €7.99 m (9 mths 2024).

    *Assets*: €403.493 m (30 Sep 2025) vs €398.763 m (31 Dec 2024).

    *Liabilities*: €169.676 m (30 Sep 2025) vs €165.690 m (31 Dec 2024).

    *Equity*: €233.817 m (30 Sep 2025) vs €233.073 m (31 Dec 2024).

    **Conclusion**

    The fund’s disciplined vacancy management, strategic acquisitions, and effective interest‑rate hedging have strengthened cash flows and profitability. With robust refinancing prospects and a clear dividend plan, EfTEN Real Estate Fund AS is positioned to deliver enhanced shareholder returns in the coming year.