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Creating homes in a
smart way

...directly tapping the market’s pulse

2007

Arco Vara launched two new products


Arco Vara launched two new products to foster the sales in “Kodukolde” project (www.kodukolde.ee).

The first product is worked out in co-operation with DnB NORD bank and enables for the client to purchase the apartment with 100% bank financing. Arco Investeeringute AS guarantees for 5 years 15% from total apartment acquisition cost.

The second product enables the client to sell the existing apartment immediately to Arco Vara for a discount if the client purchases the apartment in “Kodukolde” project.

“The problem on today’s market is not low demand but the longer sales period of your existing apartment and considerable amount of down payment for the new apartment. In co-operation with DnB NORD bank we were able to capitalize on the new market situation by utilizing our extensive sales network and business model”, said Arco’s CEO Viljar Arakas.

The project “Kodukolde” is located in Tallinn, near the beach Stroomi in the north-west of Tallinn. The total developed residential environment includes 12 apartment buildings with total of 372 apartments.

Arco Vara AS is a listed integrated property developer, constructor, broker and investment manager in the Baltic countries, undergoing a CEE expansion with presence established in Ukraine, Bulgaria and Romania. Its 2007 1HY revenues were 31 mln euros and net profit 14,5 mln euros.

DnB NORD is a leading Nordic financial institution that covers Finland, Denmark, Poland, the Baltic’s. The bank belongs to the largest bank in Norway DnB NORD and to the largest bank in north Germany NORD/LB. The bank launched its operations in Estonia in 2006.

1 EUR=15,6466 EEK

Additional information:
Heigo Metsoja
Head of Investor Relations
+372 6144 654
This email address is being protected from spambots. You need JavaScript enabled to view it.
http://www.arcorealestate.com

Arco Vara increased shareholding in its agency operations in Romania


Subsidiary of Arco Vara, Arco Real Estate AS, acquired from the second
shareholder IPC Romania OÜ its holding in Arco Rumeenia Valduste OÜ. The latter
is a holding vehicle for Arco Real Estate Consulting SRL - agency business in
Romania. After the deal Arco Real Estate AS has 100% in Arco Rumeenia Valduste
OÜ.

According to the head of service division and management board member Mr. Avo
Rõõmussaar its important to have a clear vision in developing Arco's business
model in Romania. Parties will not publish deal price.

Arco Vara AS is a listed integrated property developer, constructor, broker and
investment manager in the Baltic countries, undergoing a CEE expansion with
presence established in Ukraine, Bulgaria and Romania. Its 2007 1HY revenues
were 31 mln euros and net profit 14,5 mln euros.

1 EUR=15,6466 EEK

Additional information:
Heigo Metsoja
Head of Investor Relations
+372 6144 654
This email address is being protected from spambots. You need JavaScript enabled to view it.
http://www.arcorealestate.com

Arco Vara concluded a construction contract in Bulgaria


A subsidiary of Arco Investeeringute AS, Arco Invest EOOD and construction
company GBS-Sofia Jsc. (Glavbolgarstroy), concluded a construction contract for
the construction of first stage of the project “Madrid”.

First stage includes the shell-stage of the building. The amount of the
contract is 5,3 mln euros and the construction lasts for 18 months.

The project was acquired on 02.08.2007 with construction right already in
place. The land plot is located in the city center and includes in total 24 700
m2 of residential and commercial spaces. The project is completed in the autumn
in 2009.

“Arco's operations on Sofia market follow our expansion strategy- at first, on
the new markets we acquire the land plots already with construction rights so
that the execution could start immediately. This way Arco is able to create
much faster capital in order to take on zoning risks in the following
projects”, said CEO Viljar Arakas.

Arco Vara AS is a listed integrated property developer, constructor, broker and
investment manager in the Baltic countries, undergoing a CEE expansion with
presence established in Ukraine, Bulgaria and Romania. Its 2007 1HY revenues
were 31 mln euros and net profit 14,5 mln euros.

Please, find the visuals of the project on links below:


1 EUR=15,6466 EEK

Additional information:
Heigo Metsoja
Head of Investor Relations
+372 6144 654
This email address is being protected from spambots. You need JavaScript enabled to view it.
http://www.arcorealestate.com

 

Change in the accounting of majority shareholders


4,4 mln Arco Vara shares (1 466 667 belonging to OÜ HM Investeeringud and 2 933
333 to OÜ Toletum), that up to today were located on Nordea Bank Finland Plc.'s
representative account will be transferred to the accounts of HM Investeeringud
and OÜ Toletum in SEB Eesti Ühispank.

In addition, 2 736 842 shares (912 281 belonging to OÜ HM Investeeringud and 1
824 561 to OÜ Toletum), that up to today were located on Central Securities
Depository of Lithuania representative account will be transferred to the
accounts of HM Investeeringud and OÜ Toletum in SEB Eesti Ühispank.

Neither OÜ Toletum or OÜ HM Investeeringud ownership in Arco Vara hasn't
changed. The arrangement improves the asset management of OÜ Toletum and OÜ HM
Investeeringud.

Additional information:
Heigo Metsoja
Head of Investor Relations
+372 6144 654
This email address is being protected from spambots. You need JavaScript enabled to view it.
http://www.arcorealestate.com
 

Arco Vara started construction works on its 1st development project in Bulgaria


Arco Vara started its first development project in the centre of Sofia - Boulevard Residence. The building with total area of 24 830sqm will be ready by autumn 2009 and comprises of 112 apartments and 2 floors of commercial space. The building is located in the center of Sofia on Madrid Boulevard and has also underground parking for 164 cars.

The developer of the project is Arco Invest EOOD, the local development unit of Arco Vara group. The construction of first stage of the building is made by Bulgarian construction company GBS-Sofia Jsc. (Glavbolgarstroy). The total planned investment to the project is approx. 20 mln EUR.

The average price of apartments in the project is 1600 EUR/sqm and the sales activities will start in January 2008, until then the company pre-registers clients with interest to the project. Customers have a large variety of interior solutions and can select from 15 different options in three price categories-standard, comfort and exclusive. Interior designers are used in the process.

Arco Real Estate started its activities in Bulgaria in summer 2006 and by today the team is formed of 41 people. The development division is actively dealing with 2 development projects of which Boulevard Residence is also in construction.

Arco Vara started in 1992 as a real estate agency in Estonia and has become a leading real estate group in the Baltic States undergoing a CEE expansion with presence in Bulgaria, Romania and Ukraine. The company is operating in brokerage, development and construction sectors, and has offices in 29 cities across the Baltics as well as Ukraine, Bulgaria and Romania. The group employees over 600 people. The consolidated turnover of Arco Vara AS in the first half-year of 2007 was 31,2 mln EUR and net profit 14,5 mln EUR. Arco Vara is a public company, listed on Tallinn Stock Exchange.


For further information about the company please visit www.arcorealestate.com.

For further info on Boulevard Residence please visit www.arcoreal.bg

Interim unaudited report, 9 months 2007


Financial highlights

  • Revenue and other income totalled 686.7 million kroons (43.9 million euros), a 
    solid 76.8% increase year-on-year
  • Operating profit reached 112.3 million kroons (7.1 million euros), 55.0% up    
    year-on-year
  • Net profit reached 264.1 million kroons (16.9 million euros), 4.8-fold increase
  • Equity to assets ratio rose to 55.3% (9 months 2006: 31.1%) and return on equity
    improved to 31.2% (9 months 2006: 15.8%)
  • Return on invested capital was 19.4 % (9 months 2006: 7.7%)
  • Order backlog at period-end stood at 361 million kroons (23.1 million euros)
  • In 9 months were sold or booked apartments or land plots 98 pieces.            

Comments from Arco's CEO Viljar Arakas:
                                       
In Estonia and Latvia the sales of residential properties became more          
complicated in the third quarter. In Lithuania the situation is more favourable
compared to the rest of the Baltic region. Deal volumes have dropped, small    
players can't get refinancing on favourable terms and customers have postponed 
their purchasing decisions for a while.  This has also affected Arco's         
residential projects that are right now under construction in the Baltic's and 
continue to effect in short-term. In case of Arco, most of the residential     
pipeline in the Baltic's is planned to come to market after two to three years.
The value of these assets depends more on the purchasing power and market      
situation in the capital cities after two years.
                               
Demand for commercial spaces in the city centre hasn't decreased. Downtown     
A-category office- and retail vacancies are close to zero.  The situation      
increases the value of Arco's existing cash flow generating projects and creates
favourable conditions for the start of construction of Ahtri 3 and Laeva 2     
commercial projects in Tallinn in the next 12 months.
                          
Although the value of Arco's assets haven't increased in Q3 and the situation  
favours big and well capitalised developers, the focus of the group is in the  
Balkan region, where we already started the construction of 112 apartment      
project called “Madrid”.
                                                      
We are pleased on the results of our construction division that represents the 
success of restructuring that already started in 2006. 9 month EBIT has improved
almost 23.0 million kroons (1.5 million euros) and reached a level of 9.9      
million kroons (0.6 million euros). Loss-generating contracts have expired and 
in the new ones the construction price risk is more diversified among the client
and constructor
                                                               
In Q3 the funds of Explorer Property Fund - Baltic States AB, managed by Arco's
joint-venture with East Capital, were fully invested. It took two years of hard
work to close the portfolio. The asset volume in total is 3,129 million kroons 
(200 million euros) and the average entrance yield is 8.35%.                   

Please see the report HERE

Additional information:                                                        
Heigo Metsoja                                                                  
Investor Relations Manager                                                     
+372 6144 654                                                                  
This email address is being protected from spambots. You need JavaScript enabled to view it.                                                      
www.arcorealestate.com