Hepsor and EfTEN Join Forces: Nearly 300 New Apartments Rising in Lasnamäe
Hepsor is launching a partnership with the prestigious investment company EfTEN Capital's managed trust fund EfTEN Special Opportunities Fund to jointly develop approximately 300 new apartments in the capital's largest residential area.
In close proximity to the Song Festival Grounds and the planned Tallinn Hospital, the Paevälja residential area will receive significant expansion. The buildings to be constructed will contain homes and commercial spaces that, together with carefully planned public spaces, will form a unified and coherent urban quarter.
„For us, it is important to offer a sustainable and high-quality integrated solution that would fit into a modern and human-centered urban space, not simply to build houses. This quarter will have character, complete with green areas, while the city center is just a few minutes away," said Hepsor's CEO Henri Laks.
In the Paevälja development area, Hepsor completed the first 100 successfully sold homes in 2023. In cooperation with EfTEN, the development of the next phases of the Paevälja area continues. The first phase – based on the winning entry of the architectural competition created by architecture firm Molumba – includes the construction of approximately 100 homes and new commercial spaces. The architectural solution combines historical elements, such as limestone walls, with new and modern solutions. A square with recreational areas will be located in the center of the quarter. Construction is planned to begin in spring 2026. The Paevälja development area as a whole provides the opportunity to build a total of 500 new homes.
„The residential development being built in Lasnamäe is, alongside three Lithuanian investments made by the EfTEN Special Opportunities Fund created last year, the fund's first investment in Estonia, reaching 7.5 million euros in the full realization of the development project. The EfTEN Special Opportunities Fund provides financing for real estate projects that have not yet reached the stage where bank financing becomes available. The fund has over 20 million euros of uninvested capital, and the fund's largest investors are the EBRD and Estonian and Latvian pension funds," said EfTEN Capital's Executive Director Kristjan Tamla.
According to recent statistics, the capital has approximately 2,700 new homes for sale in new development projects, of which only 2% are located in Lasnamäe. However, as of early April, Tallinn's largest city district is home to almost 120,000 people, which points to a significant contradiction between the potential of demand and the supply of new developments in the Lasnamäe area.
„Lasnamäe is comparable in size to the city of Tartu, yet new residential buildings and developments offering modern conditions are currently scarce. We are making our contribution by creating a quarter that offers the people of the area quality living conditions," said Laks.
„Today, the average square meter price of new developments offered in Tallinn is already over 5,000 euros. This makes acquiring new real estate increasingly inaccessible to more and more people. Through the cooperation of the EfTEN Special Opportunities Fund and Hepsor, the new development rising in Lasnamäe aims to bring to the market new apartments that are significantly more affordable than average," added Tamla.
In order to combine the efforts of Hepsor and EfTEN Capital in developing the quarter, Hepsor Finance OÜ sold a 50% stake in the company developing the quarter, Hepsor SOF OÜ, to the trust fund EfTEN Special Opportunities Fund. The joint venture Hepsor SOF OÜ acquired a total of five properties from Hepsor group companies for a combined value of 9 million euros, to which VAT is added.
„The cooperation with EfTEN allows us to bring a new quality living environment to Lasnamäe. EfTEN is a reliable and professional partner whose long-term experience in real estate investments also adds strategic weight to the project," explained Laks.
With this transaction, Hepsor releases some equity capital from the development project to direct it to other development projects in the home markets and thus generate additional revenue. From the sales transactions, Hepsor's shareholders will earn a total profit of 3.7 million euros, of which 1.9 million euros will be realized in 2025.
