Eika Asset Management (EAM), an investment management company belonging to the EIKA group, which managed four investment funds in 2023, says that it was a year of searching for new markets and new products. The return on investments already made was pleasing, so the company took the time to explore new opportunities, some of which will be implemented this year. Viktorija Orkinė, the company’s CEO, says that the company always follows the tactic of carefully weighing each decision and not rushing too much – this allows them to earn the trust of investors and continue to grow steadily.
Return on investment – encouraging
EAM 2023 managed four funds – Eika Residential Fund (ERF), Eika Real Estate Fund (EREF), Eika Development Fund (EDF) and Eika Green Energy Fund (EGEF).
“The oldest of them, the Eika Residential Fund, intended for residential housing development, will be closed this year and is planning record results for investors, between 28-30 percent. internal rate of return (IRR),” calculated Viktorija Orkinė, CEO of EAM.
The largest fund for investments in commercial property – EREF, earned a profit of 3.383 million euros, and will probably be the only real estate fund in Lithuania that pays dividends to its investors for 2023. The fund has indicated in its strategy that it pays up to 5 percent dividends to investors once a year.
The year 2023 started actively for this fund. In January, the completion certificate for the construction of the new Tamras terminal in Kaunas FEZ was received – soon the tenant of this building celebrated its housewarming, and the building was nominated as one of the best logistics buildings last year. At the end of February, the EAM team completed the acquisition of a business center in Warsaw – now this building is fully leased and generates a stable rental income stream.
“This was the Fund’s first investment in Poland. No more property acquisition transactions took place in 2023, but we used the time for a deeper market analysis and understanding of the investment environment of different real estate sectors – thus preparing the ground for future investments in Poland, which we plan to make in 2024 for approximately EUR 60 million,” revealed V. Orkinė.
EREF also signed a long-term lease agreement with the pharmacy chain “Camelia” in 2023 for the entire 5,600 sq. m building located in Kaunas, on IX-ojo forta street, where “Camelia” has established its office and main warehouse.
“An excellent occupancy rate was achieved, with less than one percent of the 56,000 square meters of managed space vacant, and all premises were rented at prices not lower than market prices – this led to a fairly significant increase in the net operating income (NOI) of buildings managed by EREF,” commented V. Orkinė.
Reputation is crucial in a slowing market
EDF has been operating for three years and in 2023 developed three residential construction projects in Vilnius.
“When the market was very active, it didn’t matter who developed the residential projects – the apartments were still bought. When the market is slower and more complex, buyers prefer to choose apartments from well-known and experienced developers, because they know that the projects will be completed and construction guarantees apply,” said V. Orkinė.
EDF’s investments in projects in Vilnius city in 2023 amounted to 11.7 million euros, and another 37.5 million euros are planned to be invested in 2024. The fund’s largest investment is for the prestigious Sodai project in Vilnius city, which adds a fourth project to the fund – thus EDF’s portfolio becomes fully diversified, including economy, medium, and prestigious class housing.
According to V. Orkinė, the fact that investments in prestigious housing make up the largest portion of the portfolio provides more security for investors, as buyers of this class of housing are the least sensitive to high interest rates and have the opportunity to purchase housing even in more difficult times.
EGEF did not acquire any new projects last year, but developed a nearly 4MW park in the Alytus region and signed a PPA for the supply of electricity. It also continued to develop, but not yet completed, parks in Cyprus.
Future plans include Western countries
V. Orkinė said that in 2023, in search of new markets and products, a decision was made to create a co-living fund that will invest in projects in the Baltic States and Poland, and it was also decided to establish a US StepStone feeder fund that will invest in secondary market private equity fund units.
“We are also considering Funds that would invest in real estate in the West, especially in Germany or Spain. We do not make hasty decisions – first we research the market, get acquainted with the legal and tax environment, market practices, and only when we feel confident do we move into another market,” said V. Orkinė.