Eika Asset Management: Return on investment is encouraging and we plan record results for investors

Eika Asset Management (EAM), the investment management company of 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 the investments was satisfactory, so the company took the time to explore new opportunities, some of which will be implemented this year. Viktorija Orkinė, the head of the company, says that the company's tactic of weighing every decision carefully and not rushing into anything has allowed it to earn the trust of investors and continue its steady growth.

Encouraging return on investment

In 2023, EAM managed four funds: Eika Residential Fund (ERF), Eika Real Estate Fund (EREF), Eika Development Fund (EDF) and Eika Green Energy Fund (EGEF). ‘Eika Residential Fund, the oldest of them, dedicated to the residential development, will be closed this year and is planning record results for investors, between 28-30 % internal rates of return (IRR)’, says Orkinė.

The largest fund dedicated to investments in commercial real estate, EREF, earned EUR 3.383 million. It will probably be the only real estate fund in Lithuania to pay dividends to its investors in 2023. The Fund has stated in its strategy that it will pay up to 5% dividends to investors once a year.

2023 has started actively for this Fund. In January, the certificate of completion for the construction of the new Tamro terminal in the Kaunas FEZ was received, the tenant of this building celebrated its housewarming shortly afterwards, and the building was nominated as one of the best logistics buildings of last year. At the end of February, the EAM team completed the acquisition of a business centre in Warsaw, which is now fully let and generating a steady stream of rental income.

V. Orkinė: ‘This was the Fund's first investment in Poland. There were no further acquisitions in 2023, but we used the time for deeper market analysis and understanding of the investment environment in various real estate sectors to prepare the ground for future investments in Poland, which we expect to be around EUR 60 million in 2024’.

In 2023, EREF also signed a long-term lease agreement with pharmacy chain Camelia for the entire 5600 sqm building in Kaunas, IX-ojo Forto Street, where Camelia has established its office and main warehouse. ‘We have achieved an excellent occupancy rate, with less than one per cent of the 56,000 sqm of managed space vacant, and all premises have been leased at above market rates, resulting in a quite significant increase in the Net Operating Income (NOI) of EREF's managed buildings’, says the CEO.

Reputation is key in a slowing market

EDF has been in business for three years and has developed three residential projects in Vilnius in 2023.

‘When the market was extremely active, it didn’t matter who developed the residential projects – the apartments were still bought. When the market is slower and more complicated, buyers prefer to buy apartments from well-known and experienced developers because they know that the projects will be completed and that the construction guarantees will be applied’, says Orkinė.

EDF’s investment in Vilnius projects in 2023 amounted to EUR 11.7 million, with a further EUR 37.5 million planned for 2024. The Fund’s largest investment is the prestigious Sodų project in Vilnius, which adds a fourth project to the Fund, making EDF's portfolio fully diversified with a mix of economy, middle and prestigious housing.

According to V. Orkinė, the fact that the portfolio probably includes the largest share of investments in prestigious residential buildings gives investors more security, as buyers of this class of housing are the least sensitive to high interest rates and have the opportunity to buy housing even in harder times.

EGEF did not acquire any new projects last year, but developed a nearly 4 MW park in the Alytus district and signed a PPA for electricity supply. It also continued to develop, but has not yet completed, parks in Cyprus.

Future plans include western countries

V. Orkinė said that in 2023, while looking for new markets and products, it was decided to set up a co-living fund to invest in projects in the Baltic countries and Poland, as well as a US StepStone feeder fund to invest in units of private equity funds on the secondary market.

She added: ‘We are also considering funds to invest in real estate in western countries, particularly Germany or Spain. We do not make hasty decisions – we first research the market, familiarise ourselves with the legal and tax environment and market practices, and only when we feel confident, we enter another market’.