Management Board of Northern Horizon Capital AS has approved the unaudited consolidated interim financial statements of Baltic Horizon Fund (the Fund) for the three months of 2022.
Distributions to unitholders for Q1 2022 Fund results
On 28 April 2022, the Fund declared a cash distribution of EUR 1,555 thousand (EUR 0.013 per unit) to the Fund unitholders for Q1 2022 results. The payout also represents a 6.3% rolling distribution yield for the past 12 months based on the closing unit price of the last day of Q1 2022 on the Nasdaq Tallinn Stock Exchange.
Net result and net rental income
The Group recorded a net profit of EUR 2.0 million for Q1 2022 against a net profit of EUR 1.9 million for Q1 2021. The net result was significantly impacted by strong recovery of the Galerija Centrs operating performance as fewer COVID-19 rent reliefs have been granted to tenants in 2022. The positive impact of the increase in net rental income was also influenced by a decrease in administrative expenses. Earnings per unit for Q1 2022 were EUR 0.02 (Q1 2021: EUR 0.02).
The Group earned net rental income of EUR 4.2 million in both Q1 2022 and Q1 2021. The results for Q1 2021 still included EUR 0.3 million of net rental income from G4S Headquarters, which was sold in Q4 2021 and did not contribute to Q1 2022 results. Rent indexations and recovery of income improved the net rental income of the same portfolio mix (like-for-like portfolio).
Gross Asset Value (GAV)
At the end of Q1 2022, the Fund’s GAV was EUR 345.6 million (31 December 2021: EUR 346.3 million). The change is mainly related to a dividend pay-out in Q1 2022. The Fund made capital investments (EUR 1.9 million) in the Meraki office building development project during Q1 2022. The Fund aims to carry on with the construction of the Meraki office building throughout 2022 and 2023. An additional EUR 2.2 million was invested in other (re)development projects.
Net Asset Value (NAV)
At the end of Q1 2022, the Fund’s NAV slightly increased to EUR 133.0 million (31 December 2021: EUR 132.6 million). The increase in operational performance and positive cash flow hedge reserve movement of EUR 0.7 million over the quarter was offset by a EUR 2.3 million dividend distribution to the unitholders. As at 31 March 2022, IFRS NAV per unit stood at EUR 1.1114 (31 December 2021: EUR 1.1082), while EPRA net tangible assets and EPRA net reinstatement value were EUR 1.1902 per unit (31 December 2021: EUR 1.1884). EPRA net disposal value was EUR 1.1100 per unit (31 December 2021: EUR 1.1086).
Investment properties
The occupancy rate as of 31 March 2022 was 92.4% (31 December 2021: 92.1%). The overall occupancy rates in the portfolio rose after the successful launch of the North Star office hotel and filling the premises with small tenants. Increasing occupancy figures were supplemented with new leases in Lincona and Europa. Occupancy rates in the office segment remain strong at around 98% after the conclusion of new leases. Positive momentum in office leasing is expected to continue in Q2 2022. Retail leasing teams have been expanded to fasten the leasing process. The Fund is having in-depth negotiations with potential anchor tenants for shopping centres. The average direct property yield during Q1 2022 increased notably to 5.0% (Q4 2021: 4.5%). The net initial yield for the whole portfolio for Q1 2022 was 5.3% (Q4 2021: 4.8%). Property yields increased compared to Q4 2021 after a strong recovery of Galerija Centrs results following the lift of lockdowns at the end of 2021 and positive rent indexations across the portfolio.
The Baltic Horizon Fund portfolio consists of 14 cash flow generating investment properties in the Baltic capitals and an investment property under construction on the Meraki land plot. At the end of Q1 2022, the fair value of the Fund’s portfolio was EUR 331.8 million (31 December 2021: EUR 327.4 million) and incorporated a total net leasable area of 144,071 sq. m. During Q1 2022, the Fund invested EUR 0.3 million in the existing property portfolio and EUR 4.1 million in the reconstruction or development projects.
Key earnings figures
| EUR ‘000 | Q1 2022 | Q1 2021 | Change (%) | |||||
| Net rental income | 4,193 | 4,173 | 0.5% | |||||
| Administrative expenses | (659) | (745) | (11.5%) | |||||
| Other operating income | 7 | – | – | |||||
| Valuation losses on investment properties | (6) | (4) | 50.0% | |||||
| Operating profit | 3,535 | 3,424 | 3.2% | |||||
| Net financing costs | (1,442) | (1,390) | (3.7%) | |||||
| Profit before tax | 2,093 | 2,034 | 2.9% | |||||
| Income tax | (97) | (129) | (24.8%) | |||||
| Net profit for the period | 1,996 | 1,905 | 4.8% | |||||
| Weighted average number of units outstanding (units) | 119,635,429 | 119,635,429 | – | |||||
| Earnings per unit (EUR) | 0.02 | 0.02 | – | |||||
Key financial position figures
| EUR ‘000 | 31.03.2022 | 31.12.2021 | Change (%) | ||||
| Investment properties in use | 318,430 | 315,959 | 0.8% | ||||
| Investment property under construction | 13,393 | 11,400 | 17.5% | ||||
| Gross asset value (GAV) | 345,592 | 346,338 | (0.2%) | ||||
| Interest-bearing loans and bonds | 198,425 | 198,571 | (0.1%) | ||||
| Total liabilities | 212,628 | 213,754 | (0.5%) | ||||
| IFRS Net asset value (IFRS NAV) | 132,964 | 132,584 | 0.3% | ||||
| EPRA Net Reinstatement Value (EPRA NRV) | 142,387 | 142,176 | 0.1% | ||||
| Number of units outstanding (units) | 119,635,429 | 119,635,429 | – | ||||
| IFRS Net asset value (IFRS NAV) per unit (EUR) | 1.1114 | 1.1082 | 0.3% | ||||
| EPRA Net Reinstatement Value (EPRA NRV) per unit (EUR) | 1.1902 | 1.1884 | 0.2% | ||||
| Loan-to-Value ratio (%) | 59.8% | 60.7% | – | ||||
| Average effective interest rate (%) | 2.8% | 2.7% | – | ||||
Overview of the Fund’s investment properties as of 31 March 2022
| Property name | Sector | Fair value1 (EUR ‘000) |
NLA (sq. m) |
Direct property yield Q1 20222 |
Net initial yield Q1 20223 |
Occupancy rate |
| Vilnius, Lithuania | ||||||
| Duetto I | Office | 17,347 | 8,587 | 8.0% | 6.9% | 100.0% |
| Duetto II | Office | 19,683 | 8,674 | 7.6% | 7.1% | 100.0% |
| Europa SC | Retail | 38,951 | 16,844 | 1.3% | 1.4% | 81.8% |
| Domus Pro Retail Park | Retail | 16,268 | 11,226 | 8.0% | 7.8% | 98.7% |
| Domus Pro Office | Office | 7,823 | 4,831 | 8.3% | 6.8% | 100.0% |
| North Star | Office | 20,031 | 10,550 | 6.2% | 6.5% | 97.1% |
| Meraki Development | 13,393 | – | – | – | – | |
| Total Vilnius | 133,496 | 60,712 | 5.3% | 5.2% | 94.2% | |
| Riga, Latvia | ||||||
| Upmalas Biroji BC | Office | 21,959 | 10,459 | 7.6% | 8.3% | 100.0% |
| Vainodes I | Office | 18,161 | 8,052 | 6.5% | 7.8% | 100.0% |
| LNK Centre | Office | 16,840 | 7,452 | 6.4% | 6.6% | 100.0% |
| Sky SC | Retail | 5,106 | 3,249 | 8.2% | 8.2% | 97.4% |
| Galerija Centrs | Retail | 65,576 | 20,022 | 3.2% | 3.6% | 74.1% |
| Total Riga | 127,642 | 49,234 | 5.0% | 5.6% | 89.3% | |
| Tallinn, Estonia | ||||||
| Postimaja & CC Plaza complex | Retail | 29,775 | 9,147 | 2.6% | 3.2% | 93.9% |
| Postimaja & CC Plaza complex | Leisure | 14,442 | 8,664 | 7.2% | 5.9% | 100.0% |
| Lincona | Office | 16,996 | 10,870 | 6.6% | 6.1% | 90.8% |
| Pirita SC | Retail | 9,472 | 5,444 | 4.5% | 5.9% | 89.2% |
| Total Tallinn | 70,685 | 34,125 | 4.5% | 4.8% | 93.7% | |
| Total portfolio | 331,823 | 144,071 | 5.0% | 5.3% | 92.4% |
- Based on the latest valuation as at 31 March 2022, subsequent capital expenditure and recognised right-of-use assets.
- Direct property yield (DPY) is calculated by dividing annualized NOI by the acquisition value and subsequent capital expenditure of the property.
- The net initial yield (NIY) is calculated by dividing annualized NOI by the market value of the property.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
| EUR ‘000 | 01.01.2022- 31.03.2022 |
01.01.2021- 31.03.2021 |
| Rental income | 4,959 | 4,677 |
| Service charge income | 1,304 | 1,217 |
| Cost of rental activities | (2,070) | (1,721) |
| Net rental income | 4,193 | 4,173 |
| Administrative expenses | (659) | (745) |
| Other operating income | 7 | – |
| Valuation losses on investment properties | (6) | (4) |
| Operating profit | 3,535 | 3,424 |
| Financial income | – | – |
| Financial expenses | (1,442) | (1,390) |
| Net financial expenses | (1,442) | (1,390) |
| Profit before tax | 2,093 | 2,034 |
| Income tax charge | (97) | (129) |
| Profit for the period | 1,996 | 1,905 |
| Other comprehensive income that is or may be reclassified to profit or loss in subsequent periods | ||
| Net gain on cash flow hedges | 721 | 210 |
| Income tax relating to net gain on cash flow hedges | (64) | (15) |
| Other comprehensive income, net of tax, that is or may be reclassified to profit or loss in subsequent periods | 657 | 195 |
| Total comprehensive income for the period, net of tax | 2,653 | 2,100 |
| Basic and diluted earnings per unit (EUR) | 0.02 | 0.02 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| EUR ‘000 | 31.03.2022 | 31.12.2021 |
| Non-current assets | ||
| Investment properties | 318,430 | 315,959 |
| Investment property under construction | 13,393 | 11,400 |
| Intangible assets | 8 | 9 |
| Property, plant and equipment | 2 | 2 |
| Other non-current assets | 23 | 23 |
| Total non-current assets | 331,856 | 327,393 |
| Current assets | ||
| Trade and other receivables | 2,959 | 2,708 |
| Prepayments | 315 | 137 |
| Cash and cash equivalents | 10,462 | 16,100 |
| Total current assets | 13,736 | 18,945 |
| Total assets | 345,592 | 346,338 |
| Equity | ||
| Paid in capital | 145,200 | 145,200 |
| Cash flow hedge reserve | (172) | (829) |
| Retained earnings | (12,064) | (11,787) |
| Total equity | 132,964 | 132,584 |
| Non-current liabilities | ||
| Interest-bearing loans and borrowings | 152,806 | 157,471 |
| Deferred tax liabilities | 6,456 | 6,297 |
| Derivative financial instruments | 94 | 756 |
| Other non-current liabilities | 1,185 | 1,103 |
| Total non-current liabilities | 160,541 | 165,627 |
| Current liabilities | ||
| Interest-bearing loans and borrowings | 46,189 | 41,676 |
| Trade and other payables | 5,095 | 5,223 |
| Income tax payable | 8 | 5 |
| Derivative financial instruments | 50 | 109 |
| Other current liabilities | 745 | 1,114 |
| Total current liabilities | 52,087 | 48,127 |
| Total liabilities | 212,628 | 213,754 |
| Total equity and liabilities | 345,592 | 346,338 |
For more information, please contact:
Tarmo Karotam
Baltic Horizon Fund manager
E-mail tarmo.karotam@nh-cap.com
www.baltichorizon.com
The Fund is a registered contractual public closed-end real estate fund that is managed by Alternative Investment Fund Manager license holder Northern Horizon Capital AS. Both the Fund and the Management Company are supervised by the Estonian Financial Supervision Authority.
This announcement contains information that the Management Company is obliged to disclose pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the above distributors, at 22:30 EET on 9 May 2022.
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