Eika Asset Management (EAM), which manages funds investing in both residential and commercial properties, as well as alternative energy, is pleased with a particularly successful 2022 – investments covered not only the Lithuanian market, but also foreign ones. In 2023, it is planned to invest EUR 61 million..
According to EAM CEO Viktorija Orkinė, last year was more profitable than ever for the funds under management. “We invested in both Lithuanian and foreign markets. We expected good results, but everywhere the returns significantly exceeded our promises to investors. We are extremely cautious in assessing opportunities, we manage our investments with great involvement and we see that it pays off,” says V. Orkinė.
EAM manages four funds: Eika Residential Fund (ERF), whose investments are directed towards residential real estate objects, Eika Real Estate Fund (EREF) – commercial real estate objects, Eika Development Fund (EDF) – mixed-use, and Eika Green Energy Fund (EGEF), whose capital is directed towards renewable energy sources and electricity storage technologies.
Completion of started projects and search for new horizons
Last year, Eika Real Estate Fund managed to complete the construction of the DHL Lietuva terminal for the Baltic States, acquire the production base of the engineering wholesale company ViaCon Baltic in Kaunas, and expand beyond Lithuania – in Latvia, it completed a deal to acquire the Maxima shopping center in Riga and the BCT-2 business center in Kočice, Slovakia.
The end of 2022 – the beginning of 2023 showed that there may be challenges in finding new EREF fund investments in commercial property. “Due to the worsening financing conditions of commercial banks operating in the country and the growth of interbank interest rates EURIBOR, it is likely that in the near future it will be difficult to find investments in Lithuania that meet the fund’s strategy – sellers’ expectations have not changed yet. We are currently actively analyzing the Polish and Slovak markets, where, due to the withdrawal of larger investors from the West due to geopolitical risks, price corrections are already noticeable and investments are becoming more attractive,” says Viktorija Orkinė.
In 2023, the EREF Fund plans to complete the development of the Tamros logistics center in the Kaunas FEZ, and to locate UAB Nemuno vaistinė, which operates the Camelia pharmacy chain, in office and warehouse premises in Kaunas. The Fund intends to invest in Warsaw and Bratislava, and is analyzing more Central and Eastern European markets.
Back in August 2022, the latest EAM fund, the Eika Green Energy Fund, was launched, which was established in response to climate change and energy price spikes. The fund’s first investments in solar power parks took place in Lithuania and Cyprus. According to Viktorija Orkinė, developing solar power plants in Cyprus costs approximately 30 percent more than in Lithuania, but due to greater sunlight, a higher return is expected. During this and the coming years, 2024, the aim is to grow the Cyprus portfolio to 50MW.
Investments of funds managed by EAM did not overtake the Vilnius housing market
Last year, 2,253 apartments were sold on the Vilnius market, three times less than in 2021 (6,888 apartments). The Eika Residential Fund, managed by EAM, notices that customers are hesitant about purchasing a new home, but the demand in Vilnius, as shown by the secondary market, remains high. The number of people living in the capital is growing and their incomes are still growing. Viktorija Orkinė says that she has noticed that the prices of energy resources, the rise in EURIBOR and the ongoing war in Ukraine are contributing to buyers’ hesitation. However, a healthy market recovery is expected in the spring, when an average of about 400 apartments are sold per month.
Currently, the ERF fund is developing two residential housing projects – “Šv. Stepono Baltė lapa” on Šv. Stepono street and “Mėlynus vilkus” on Skroblų street. The disbursement of money to investors and the closure of the fund are planned for 2023 and 2024.
Another EAM-managed fund, Eika Development Fund, successfully invested in residential housing projects in 2022. One of them is Metų laikai on Visorių Street, the construction of which is currently underway. Other projects in Pilaitė and Naujininkai are planned to be built in 2023. “With the EDF fund, we plan to develop existing projects and invest in another residential construction project in Vilnius,” says V. Orkinė.
2023 market – what to expect
As geopolitical and global economic tensions continue, investors’ attitudes and goals are also changing. Although the market remains active, some investors are waiting for better opportunities and expect a significant change in prices, wanting to protect their money from inflation. Investors have begun to take a more bold interest in the foreign market, seeking to diversify their portfolio and direct at least part of their investments outside Lithuania, which is why they are interested in the opportunities of the EGEF and EREF funds, which are focused on solar power plants in Cyprus and the Central and Eastern European region. “We see more segments in which we can invest, so it is very likely that in 2023 we will inform about the establishment of a new fund,” Viktorija Orkinė shares her predictions.