Arco Vara unaudited consolidated interim report for Q1 of 2025

Group CEO's Review - The first quarter of 2025 saw a moderate recovery in Estonia's real estate market, with signs of revitalization despite cautious economic sentiment [1] - The decline of the Euribor and stabilizing inflation contributed to increased transaction activity and consumer interest, particularly in the residential segment [1] Development Activity - The new development market in Tallinn remained active, with stable price levels and strong interest, particularly in the Rannakalda development where 91 out of 113 apartments have been sold [2] - Arco Vara acquired a new development site on Spordi Street in Tallinn, with pre-sales expected to begin in Q2 2025 and construction planned for the end of Q2 2025 [3] - The Kodulahe development is progressing, with construction anticipated to start in approximately two years [4] - Preparatory work for the Arcojärve project is on track, with construction scheduled to begin at the end of 2025 [5] Performance Indicators - In Q1 2025, the group's sales revenue was €1,706 thousand, an increase of €716 thousand compared to Q1 2024 [11] - The operating profit for Q1 2025 was €259 thousand, a significant improvement from an operating loss of €208 thousand in Q1 2024 [12] - The group sold 4 apartments in Q1 2025, compared to 3 apartments and 1 commercial premise in Q1 2024 [12] Market Overview - The real estate sector is on a cautious yet positive trajectory, with stable or slightly increased transaction numbers compared to the previous quarter [8] - The gradual decline in interest rates and renewed investor confidence are expected to strengthen the real estate market in the second half of 2025 [8] Challenges and Focus - Key near-term challenges include achieving successful sales in the Kodulahe and Kuldlehe projects in Estonia and finalizing sales in the Botanica Lozen development in Bulgaria [9] - The focus of sales activity is on completed apartments and houses to ensure stable cash flow for upcoming large-scale projects [9] Financial Position - As of March 31, 2025, the group's debt burden increased to €15,455 thousand, with a weighted average annual interest rate of 8.2%, down by 0.5 percentage points from December 31, 2024 [13] - Total assets as of March 31, 2025, were €42,728 thousand, an increase from €39,568 thousand at the end of 2024 [22][23]