"Eika Asset Management" (EAM) manages funds investing in both residential and commercial real estate, as well as alternative energy. EAM is pleased with a remarkably successful 2022, with investments not only in the Lithuanian market but also abroad. In 2023, EUR 61 million are planned to be invested.
According to EAM CEO Viktorija Orkinė, last year was as profitable as ever for the funds under management. "We invested in both Lithuanian and foreign markets. We expected good results, but the returns far exceeded our promises to investors everywhere. We are extremely careful in our approach to opportunities, we manage our investments with a high level of commitment, and we see it paying off," says Ms. Orkinė.
EAM manages four funds: the Eika Residential Fund (ERF), which focuses on residential real estate, the Eika Real Estate Fund (EREF), which focuses on commercial real estate, the Eika Development Fund (EDF), which focuses on mixed-use real estate, and the Eika Green Energy Fund (EGEF), which focuses on renewable energy power plants and electricity storage technologies.
Completion of ongoing projects and exploration of new horizons
Last year, Eika Real Estate Fund completed the construction of the DHL Lietuva terminal for the Baltics. Successfully acquire the production bases of the mechanical engineering wholesaler ViaCon Baltic in Kaunas. Also expand beyond Lithuania by completing the acquisition of the Maxima shopping center in Riga, Latvia, and acquire of the BCT-2 business center in Kochitsa, Slovakia.
The end of 2022 and the beginning of 2023 showed that there might be challenges in finding new EREF investments in commercial property. "Due to the deterioration of financing conditions of commercial banks operating in the country and the rise in EURIBOR interbank interest rates, it is likely to be difficult to find investments in Lithuania in line with the fund's strategy shortly, as sellers' expectations have not yet changed. We are currently actively analyzing the Polish and Slovak markets, where the geopolitical risks have already led to a correction in the prices of the larger investors from the West, making investments more attractive", says Viktorija Orkinė.
In 2023, EREF plans to complete the development of the Tamro logistics center in Kaunas FEZ and to locate UAB Nemuno vaistinė, which manages the Camelia chain of pharmacies, in office, and warehouse space in Kaunas. The fund intends to invest in Warsaw and Bratislava, and more Central and Eastern European markets we are analyzing.
In August 2022, Eika Green Energy Fund, the newest EAM fund, was launched in response to climate change and energy price hikes. The fund's first investments in solar farms took place in Lithuania and Cyprus. According to Viktoria Orkinė, it costs around 30% more to develop solar farms in Cyprus than in Lithuania, but the higher solar irradiation is expected to result in higher returns. The current ambition is to grow the Cyprus portfolio to 50MW, but this is likely to take until 2023 as well as 2024.
EAM-managed funds' investments have not bypassed 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 EAM-managed Eika Residential Fund (ERF) has noticed clients' hesitation to buy a new home, but demand in Vilnius remains strong, as the secondary market shows. The number of people living in the capital is growing, and incomes are still rising. Viktorija Orkinė says she has noticed that energy prices, the rise in EURIBOR, and the ongoing war in Ukraine are contributing to buyers' hesitation. However, a healthy market recovery, with an average of around 400 sales per month, is expected in the spring.
The EDF Fund is currently developing two residential projects - "St. Stephen's White Leaf" in St. Stephen's Street and "Blue Wolves" in Skroblų Street. During 2023 and 2024, we plan to pay out money to investors and close the fund.
Another EAM-managed fund, Eika Development Fund, successfully invested in residential projects in 2022. One of them is "Metų Laikai" in Visorių Street, the construction of which is currently well underway. Other projects in Pilaitė and Naujininkai are planned to be built in 2023. "We plan to develop our existing projects with EDF and invest in another residential project in Vilnius," says V. Orkinė.
Market in 2023 - what to expect
As geopolitical and global economic tensions continue, investors' attitudes and objectives are changing. While the market remains active, some investors are looking for better opportunities and expect significant price changes, while others want to protect their money against inflation. Investors have become more boldly interested in the foreign market and are looking to diversify their portfolios and move at least part of their investments outside Lithuania. Therefore, they are interested in the opportunities of EGEF and EREF funds, which are targeting solar power plants in Cyprus and the CEE region. "We see more segments where we can invest, so we will likely announce the launch of a new fund in 2023," says Viktorija Orkinė.