Arco Vara — Quarterly Report 2026

Apr 30, 2026

INTERIM REPORT FOR THE FIRST QUARTER OF 2026 (UNAUDITED)

INTERIM REPORT FOR THE FIRST QUARTER OF 2026 (UNAUDITED)

GROUP CEO'S REVIEW

Rait Riim, CEO and Member of the Management Board of Arco Vara AS:

"The first quarter of 2026 developed largely as expected for Arco Vara, with the
company maintaining its focus on advancing its ongoing development projects.
During the quarter, a change also occurred in the company's management, and as
of 1 April, I have assumed the role of Chief Executive Officer of Arco Vara.

I have more than 20 years of experience in the real estate sector and joining
Arco Vara represents an opportunity for me to contribute to the company's next
phase of development. Arco Vara's ambition is to be a real estate developer
recognized as a benchmark for urban space and living environment quality,
sustainability, and long-term value creation. It is important that a developer
does not merely construct buildings but creates holistic environments that
homeowners take pride in and whose value grows over time.

The strength of the company's development portfolio and the potential of its
next growth phase provide the opportunity to execute large-scale and
urbanistically significant projects, which require a clear strategic vision and
strong financial discipline. My strategic objective includes expanding and
diversifying Arco Vara's product portfolio-moving beyond fully developed
apartment districts into segments such as terraced houses, detached homes, and
undeveloped plots, while also diversifying across different price segments. In
line with this, Arco Vara is open to acquisition opportunities for development
land in Tallinn and its surrounding areas with established detailed plans.

In accordance with the company's Articles of Association, my mandate as CEO has
been granted for a term of three years.

The Estonian real estate market in the first quarter of 2026 was characterized
by seasonal calmness. There were no significant changes in transaction prices or
volumes. In the early months of the year, the market was positively influenced
by signs of improvement in Estonia's economic growth environment. Negative
factors included high electricity prices in January and February, rising
interest rates, and geopolitical developments in the Middle East in March. We
observe that homebuyers are increasingly adapting to the surrounding instability
and are more willing to enter into contracts for homes that will be completed in
the future.

The loss incurred by the company during the quarter reflects the cyclical nature
of real estate development projects-losses are generated during the planning and
construction phases, while profits are realized upon completion of the
buildings. Currently, Arco Vara has 122 apartments and commercial units under
construction in Tallinn, all scheduled for completion in the fourth quarter of
this year.

Below is an overview of the company's activities by development project:

Kodulahe Quarter, Lammi 8 development: The residential building has been
completed, and as of the end of the quarter, only four apartments and one
commercial unit remain unsold out of 113 units. During the first quarter, one
apartment was sold. The plan is to sell the remaining units in the coming
quarters.

Kodulahe Quarter, Soodi 6 development: Construction, which began in June 2025,
has reached its halfway point. By the end of the quarter, 28 out of 66
apartments and commercial units had been sold under preliminary contracts. The
project is attractive to families, investors, and more demanding clients due to
its good location and well-designed layouts. Construction will be completed in
the fourth quarter of this year.

Spordi 3a/3b development: Construction, which also began in June 2025, has
reached its halfway stage. By the end of the quarter, 17 out of 56 apartments
had been sold under preliminary contracts. The Spordi Street development
enhances Arco Vara's portfolio with a prime location in the Kristiine
residential district-an area with limited new developments but strong demand.
Construction will be completed in the fourth quarter of this year.

Arcojärve development: The detailed planning process is ongoing. The detailed
plan was adopted by the local municipality on 15 October 2025, followed by a
public display. We are currently awaiting its approval. In parallel, we have
prepared building designs for new structures and infrastructure to enable
immediate application for building permits once the detailed plan is approved.
Arcojärve is a strategically important project for Arco Vara, creating a
foundation for further investments in new urban developments.

Luther Quarter development: The Luther Quarter is the flagship development of
Arco Vara. A "city within a city" is being created within and around the
historic plywood factory walls, combining the heritage of Luther with modern
urban living. The development includes 454 residential units and approximately
18,500 m² of commercial space. During the quarter, we focused on the design
phase of the first construction stage and began mapping potential buyer
interest.

Kuldlehe development: Located in Merivälja, only one residential unit remains
available. Its exclusive nature and limited supply maintain a strong position in
Tallinn's premium segment.

Bulgaria development: On 13 March, Arco Vara entered into an agreement to
involve a strategic local partner, under which Kamaleo Invest OOD will acquire a
25% stake in Botanica Lozen EOOD for a total of EUR 2,200,000. The first phase
of the Botanica Lozen development is nearing completion, with single-family
houses and villas expected to be handed over to buyers in the coming quarters.

The main objectives for the second quarter are to continue construction and
sales activities in the Spordi 3a/3b and Soodi 6 developments, as well as the
design work for the Luther Quarter. Arco Vara's position in the Estonian real
estate market remains solid, supported by well-conceived developments, quality,
and sustainable growth."

KEY PERFORMANCE INDICATORS

The Group's revenue for the first three months of 2026 was EUR 390 thousand,
which is EUR 1,316 thousand lower than in the same period of 2025.

The Group recorded an operating loss (EBIT) of EUR 483 thousand and a net loss
of EUR 578 thousand for the first three months of 2026. In the same period of
2025, the Group reported an operating profit of EUR 260 thousand and a net
profit of EUR 104 thousand.

In the first quarter of 2026, the Group sold 8 apartments in its development
projects, including 7 under preliminary contracts and 1 under a real right
contract. For comparison, in the first quarter of 2025, 4 apartments were sold
under real right contracts, and no preliminary contracts were concluded.

As of 31 March 2026, the Group had 7 completed apartments and 1 commercial unit
in inventory, compared to 24 apartments and 1 commercial unit as of 31 March
2025.

As of the end of the first three months of 2026, the Group's net loan position
amounted to EUR 41,300 thousand, which is EUR 25,845 thousand higher than at the
end of the same period last year. The increase in debt is mainly attributable to
the acquisition of the Luther Quarter, which was partially financed by a bank
loan. In addition, bonds in the amount of EUR 15,000 thousand were issued in the
third quarter of 2025. The weighted average interest rate of the Group's
interest-bearing liabilities as of 31 March 2025 was 8.84%.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

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In thousands of euros Q1 2026 Q1 2025

Revenue from sale of own real estate 270 1,589

Revenue from rendering of services 120 117

Total revenue 390 1,706

Cost of sales -325 -1,108

Gross profit 65 598

Other income 87 1

Marketing and distribution expenses -124 -69

Administrative expenses -440 -270

Other expenses -71 -1

Operating profit -483 260

Financial costs -95 -143

Profit/ loss before tax -578 117

Income tax 0 -13

Net profit/ loss for the period -578 104

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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In thousands of euros 31 March 2026 31 December 2025

Cash and cash equivalents 3,065 2,784

Receivables and prepayments 6,968 6,420

Inventories 78,786 74,127

Total current assets 88,819 83,331

Receivables and prepayments 18 18

Investment property 2,296 2,296

Property, plant and equipment 533 551

Intangible assets 36 41

Total non-current assets 2,882 2,905

TOTAL ASSETS 91,702 86,236

Loans and borrowings 4,165 4,180

Payables and deferred income 10,594 8,560

Warranty provisions 479 347

Total current liabilities 15,238 13,087

Loans and borrowings 40,200 36,283

Payables and deferred income 478 503

Total non-current liabilities 40,679 36,786

TOTAL LIABILITIES 55,917 49,873

Share capital 12,158 7,272

Share premium 16,399 3,835

Statutory capital reserve 2,011 2,011

Other reserves 28 28

Retained earnings 5,189 5,767

TOTAL EQUITY 35,785 36,363

TOTAL LIABILITIES AND EQUITY 91,702 86,236

Darja Bolshakova
CFO
Arco Vara AS
www.arcovara.com (http://www.arcovara.com)