Gross Asset Value (GAV)
As at 30 September 2018, GAV was EUR 248.6 million, slightly higher than at the end of the previous quarter (EUR 248.5 million as at 30 June 2018). During Q3 2018, the Fund completed the acquisition of LNK Centre. However, as the acquired asset is not yet leveraged, the acquisition had no effect on GAV.
Net Asset Value (NAV)
In Q3 2018, the Fund’s NAV remained unchanged at EUR 109.3 million. Equity was positively affected by the Fund’s operational performance over the quarter, however, this was offset by a EUR 2.0 million cash distribution to unitholders (EUR 0.025 per unit) and a buyback of own units.
Net Operating Income (NOI) and Net Profit
In Q3 2018, the Fund’s NOI was EUR 3.8 million (EUR 2.6 million in in Q3 2017) and net profit was EUR 2.2 million (EUR 1.7 million in Q3 2017). Growth in NOI and net profit were positively affected by new property acquisitions (Vainodes I office building, Postimaja shopping centre and LNK Centre).
Cash Distributions (dividends)
On 31 October 2018, the Fund declared a cash distribution of EUR 2,058 thousand (EUR 0.026 per unit) to Fund unitholders for Q3 2018 results (EUR 1,979 thousand or EUR 0.025 per unit for Q2 2018). During Q3 2018, the Generated Net Cash Flow (GNCF) amounted to EUR 2,070 thousand or EUR 0.026 per unit (EUR 2,267 thousand or EUR 0.029 per unit for Q2 2018).
Table 1: Quarterly Key Figures
| Euro ‘000 | Q3 2018 | Q3 2017 | Change (%) |
| Net rental income | 3,840 | 2,638 | 45.6% |
| Operating profit | 3,095 | 2,167 | 42.8% |
| Net financing costs | (774) | (346) | 123.7% |
| Profit before tax | 2,321 | 1,821 | 27.5% |
| Net profit for the period | 2,195 | 1,675 | 31.0% |
| Weighted average number of units outstanding | 79,064,293* | 60,006,856 | 31.8% |
| Earnings per unit (EUR) | 0.03 | 0.03 | -% |
| Euro ‘000 | 30.09.2018 | 31.12.2017 | Change (%) |
| Investment property in use | 243,497 | 189,317 | 28.6% |
| Gross asset value (GAV) | 248,586 | 215,785 | 15.2% |
| Interest bearing loans | 129,896 | 98,087 | 32.4% |
| Total liabilities | 139,241 | 108,809 | 28.0% |
| Net asset value (NAV) | 109,345 | 106,976 | 2.2% |
| Number of units outstanding | 78,878,692* | 77,440,638 | 1.9% |
| Net asset value (NAV) per unit (EUR) | 1.3862 | 1.3814 | 0.35% |
| Loan-to-value ratio (LTV) | 53.3% | 51.8% | |
| Average effective interest rate | 2.3% | 1.7% |
*The number of units excludes 278,402 units purchased by the Fund as part of the units buy-back program.
Investment properties PERFORMANCE in Q3 2018
During Q3 2018, the average actual occupancy of the portfolio was 97.5% (Q2 2018: 97.3%). When all rental guarantees are considered, the effective occupancy rate is 97.8% (Q2 2018: 97.6%). The average direct property yield during Q3 2018 was 6.9% (Q2 2018: 6.8%). The net initial yield for the whole portfolio for Q3 2018 was 6.6% (Q2 2018: 6.5%).
| Property name | City | Country | Book value1 Euro‘000 |
NLA | Direct property yield2 | Net initial yield3 | Occupancy rate for Q3 2018 |
| Duetto I | Vilnius | Lithuania | 16,240 | 8,327 | 7.7% | 7.1% | 100.0%4 |
| Pirita SC | Tallinn | Estonia | 10,950 | 5,400 | 7.4% | 8.2% | 100.0%4 |
| Upmalas Biroji BC | Riga | Latvia | 24,660 | 10,600 | 7.3% | 7.0% | 99.8% |
| G4S Headquarters | Tallinn | Estonia | 16,900 | 8,363 | 7.7% | 7.1% | 100.0% |
| Europa SC | Vilnius | Lithuania | 40,401 | 16,900 | 6.5% | 6.0% | 93.3% |
| Domus Pro Retail Park | Vilnius | Lithuania | 17,350 | 11,247 | 7.4% | 6.6% | 98.4% |
| Domus Pro Office | Vilnius | Lithuania | 7,306 | 4,759 | 8.2% | 7.2% | 97.9% |
| Domus Pro Land | Vilnius | Lithuania | 1,670 | – | – | – | – |
| CC Plaza | Tallinn | Estonia | 13,190 | 8,664 | 8.4% | 7.6% | 100.0% |
| Sky SC | Riga | Latvia | 5,362 | 3,263 | 8.0% | 7.4% | 99.2% |
| Lincona | Tallinn | Estonia | 16,810 | 10,859 | 7.6% | 7.2% | 93.8% |
| Vainodes I | Riga | Latvia | 21,610 | 8,052 | 7.0% | 6.9% | 100.0% |
| Postimaja | Tallinn | Estonia | 33,980 | 9,141 | 4.8% | 4.9% | 96.0% |
| LNK Centre | Riga | Latvia | 17,068 | 7,455 | 6.6% | n/a | 100.0% |
| Total portfolio | 243,497 | 113,030 | 6.9% | 6.6% | 97.8% |
- Based on the latest valuation as of 30 June 2018; the marked value of LNK Centre is based on the acquisition price.
- Direct property yield (DPY) is calculated by dividing NOI by the acquisition value and subsequent capital expenditure on the property.
- The net initial yield (NIY) is calculated by dividing NOI by the market value of the property.
- Effective occupancy rate is 100% due to a rental guarantee.
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
| Euro ‘000 | 01.07.2018-30.09.2018 | 01.07.2017-30.09.2017 (restated)* |
01.01.2018-30.09.2018 | 01.01.2017-30.09.2017 (restated)* |
| Rental income | 4,012 | 2,955 | 11,576 | 8,622 |
| Service charge income | 619 | 425 | 1,812 | 1,165 |
| Cost of rental activities | (791) | (742) | (2,513) | (1,941) |
| Net rental income | 3,840 | 2,638 | 10,875 | 7,846 |
| Administrative expenses | (748) | (535) | (2,009) | (1,935) |
| Other operating income / (expenses) | 3 | 64 | 48 | 77 |
| Valuation gains / (loss) on investment properties | – | – | 480 | 339 |
| Operating profit | 3,095 | 2,167 | 9,394 | 6,327 |
| Financial income | 2 | 2 | 6 | 45 |
| Financial expenses | (776) | (348) | (1,981) | (1,123) |
| Net financing costs | (774) | (346) | (1,975) | (1,078) |
| Profit before tax | 2,321 | 1,821 | 7,419 | 5,249 |
| Income tax charge | (126) | (146) | (964) | (1,082) |
| Profit for the period | 2,195 | 1,675 | 6,455 | 4,167 |
| Other comprehensive income that is or may be reclassified to profit or loss in subsequent periods | ||||
| Net gains (losses) on cash flow hedges | 205 | (94) | (425) | 126 |
| Termination of interest rate swap agreement | – | – | – | 57 |
| Recognition of initial interest rate cap costs | – | – | (33) | – |
| Income tax relating to net gains (losses) on cash flow hedges | (37) | 8 | 42 | (32) |
| Other comprehensive income/ (expense), net of tax, that is or may be reclassified to profit or loss in subsequent periods | 168 | (86) | (416) | 151 |
| Total comprehensive income for the period, net of tax | 2,363 | 1,589 | 6,039 | 4,318 |
| Basic and diluted earnings per unit (Euro) | 0.03 | 0.03 | 0.08 | 0.07 |
*In 2018, the Group adopted IFRS 15 Revenue from Contracts with Customers, effective 1 January 2018. As a result, the comparative figures for “service charge income” and “cost of rental activities” were adjusted. The adjustment did not have an impact on the Group’s equity. The impact is related to presentation changes in accordance with IFRS 15.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Euro ‘000 | 30.09.2018 | 31.12.2017 |
| Non-current assets | ||
| Investment properties | 243,497 | 189,317 |
| Derivative financial instruments | 39 | 89 |
| Other non-current assets | 138 | 146 |
| Total non-current assets | 243,674 | 189,552 |
| Current assets | ||
| Trade and other receivables | 2,056 | 1,568 |
| Prepayments | 246 | 108 |
| Cash and cash equivalents | 2,610 | 24,557 |
| Total current assets | 4,912 | 26,233 |
| Total assets | 248,586 | 215,785 |
| Equity | ||
| Paid in capital | 94,198 | 91,848 |
| Own units | (362) | – |
| Cash flow hedge reserve | (472) | (56) |
| Retained earnings | 15,981 | 15,184 |
| Total equity | 109,345 | 106,976 |
| Non-current liabilities | ||
| Interest bearing loans and borrowings | 129,790 | 96,497 |
| Deferred tax liabilities | 5,641 | 5,206 |
| Derivative financial instruments | 512 | 88 |
| Other non-current liabilities | 966 | 859 |
| Total non-current liabilities | 136,909 | 102,650 |
| Current liabilities | ||
| Interest bearing loans and borrowings | 106 | 1,590 |
| Trade and other payables | 1,935 | 4,202 |
| Income tax payable | – | 14 |
| Derivative financial instruments | – | 15 |
| Other current liabilities | 291 | 338 |
| Total current liabilities | 2,332 | 6,159 |
| Total liabilities | 139,241 | 108,809 |
| Total equity and liabilities | 248,586 | 215,785 |
Additional information:
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 managed by Alternative Investment Fund Manager license holder Northern Horizon Capital AS.
Distribution: Nasdaq Tallinn, Nasdaq Stockholm, GlobeNewswire, www.baltichorizon.com
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 17:40 EET on 9th of November 2018.
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