Gross Asset Value (GAV)
In Q4 2019, the GAV increased from EUR 345.3 million to EUR 371.7 million compared to the end of Q3 2019. The increase is mainly related to a new acquisition during the quarter and the increase in cash as a result of the private placements. The Fund completed the acquisition of the North Star Business Centre on 11 October 2019 and thus has deployed the new capital raised in October 2019. The value of investment properties in use increased to EUR 356.6 million after the acquisition of the North Star Business Centre and year-end valuations.
Net Asset Value (NAV)
In Q4 2019, the Fund NAV increased from EUR 135.2 million to EUR 152.5 million compared to the end of Q3 2019. The Fund NAV was positively affected by the Fund’s operational performance and a positive cash flow hedge reserve movement during the quarter. The Fund raised additional equity in the amount of EUR 16.2 million (net equity) through private placements in October. However, this was offset by a EUR 3.06 million cash distribution to unitholders (EUR 0.027 per unit).
Net Rental Income and Net Profit
In Q4 2019, the Fund earned a net profit of EUR 3.4 million (EUR 3.5 million during Q4 2018). In Q4 2019, the Fund recorded a EUR 5.6 million net rental income (EUR 3.9 million in Q4 2018). Growth in net rental income was positively affected by new property acquisitions in 2019 (Duetto II office building, Galerija Centrs shopping centre and North Star Business Centre). Compared to Q4 2018, the Fund’s net profit slightly decreased mainly due to lower fair value gain resulting from year-end valuations. During Q4 2019, the Fund recorded a fair value gain of EUR 0.4 million whereas the fair value gain in Q4 2018 was EUR 1.5 million.
Cash Distributions (dividends)
On 31 January 2020, the Fund declared a EUR 3.18 million quarterly cash distribution to investors, which represents a EUR 0.028 distribution per unit for the Q4 2019 results (EUR 3.06 million or EUR 0.027 per unit for Q3 2019). In total, the Fund has paid out EUR 11.31 million from the operating results of 2019. The pay-out also represents a 8.0% rolling distribution yield based on the closing unit price of the last day of Q4 2019 on Nasdaq Tallinn stock exchange.
Quarterly key figures
| Euro ‘000 | Q4 2019 | Q4 2018 | Change (%) |
| Net rental income | 5,635 | 3,929 | 43.4% |
| Valuations gains on investment properties | 375 | 1,534 | (75.6%) |
| Operating profit | 5,167 | 4,685 | 10.3% |
| Net financing costs | (1,401) | (806) | 73.8% |
| Profit before tax | 3,766 | 3,879 | (2.9%) |
| Net profit for the period | 3,415 | 3,535 | (3.4%) |
| Weighted average number of units outstanding | 112,686,139 | 78,637,6451 | 43.3% |
| Earnings per unit (EUR) | 0.03 | 0.04 | (25.0%) |
| Euro ‘000 | 31.12.2019 | 31.12.2018 | Change (%) |
| Investment property in use | 356,575 | 245,160 | 45.4% |
| Gross asset value (GAV) | 371,734 | 260,878 | 42.5% |
| Interest bearing loans | 205,827 | 140,507 | 46.5% |
| Total liabilities | 219,216 | 151,073 | 45.1% |
| Net asset value (NAV) | 152,518 | 109,805 | 38.9% |
| Number of units outstanding | 113,387,525 | 78,496,8311 | 44.4% |
| Net asset value (NAV) per unit (EUR) | 1.3451 | 1.3988 | (3.8%) |
| Loan-to-Value ratio (LTV) | 57.7% | 57.3% | – |
| Average effective interest rate | 2.6% | 2.4% | – |
- The number of units excludes 255,969 units acquired by the Fund and cancelled in February 2019 as part of the unit buy-back program.
Investment properties PERFORMANCE in Q4 2019
During Q4 2019, the average actual occupancy of the portfolio was 98.0% (Q3 2019: 97.3%). When all rental
guarantees are considered, the effective occupancy rate is 98.0% (Q3 2019: 97.7%). The average direct property yield during Q4 2019 was 6.6% (Q3 2019: 6.7%). The net initial yield for the whole portfolio for Q4 2019 was 6.4% (Q3 2019: 6.5%).
Overview of the Fund’s investment properties as of 31.12.2019
| Property name | Sector | Fair value1 Euro ‘000 |
NLA | Direct property yield2 | Net initial yield3 | Occupancy rate for Q4 2019 |
| Vilnius, Lithuania | ||||||
| Duetto I | Office | 16,460 | 8,586 | 7.7% | 7.1% | 100.0% |
| Duetto II | Office | 18,935 | 8,674 | 7.1% | 7.1% | 100.0% |
| Europa SC | Retail | 40,711 | 16,856 | 6.2% | 5.7% | 96.7% |
| Domus Pro Retail Park | Retail | 16,670 | 11,247 | 6.8% | 6.4% | 97.5% |
| Domus Pro Office | Office | 7,740 | 4,831 | 8.7% | 7.4% | 100.0% |
| North Star | Office | 20,092 | 10,550 | 6.8% | 6.9% | 97.9% |
| Meraki Land | 2,367 | – | – | – | ||
| Total Vilnius | 122,975 | 60,744 | 6.9% | 6.5% | 98.3% | |
| Riga, Latvia | ||||||
| Upmalas Biroji BC | Office | 24,198 | 10,458 | 7.6% | 7.2% | 100.0% |
| Vainodes I | Office | 20,890 | 8,052 | 6.8% | 6.9% | 100.0% |
| LNK Centre | Office | 17,000 | 7,453 | 6.4% | 6.5% | 100.0% |
| Sky SC | Retail | 4,850 | 3,254 | 8.2% | 8.0% | 99.4% |
| Galerija Centrs | Retail | 76,409 | 20,022 | 6.2% | 6.1% | 96.0% |
| Total Riga | 143,347 | 49,239 | 6.6% | 6.5% | 98.3% | |
| Tallinn, Estonia | ||||||
| Postimaja & CC Plaza | Retail | 32,250 | 9,145 | 4.2% | 4.5% | 92.4% |
| Postimaja & CC Plaza | Leisure | 15,150 | 8,664 | 9.0% | 7.1% | 100.0% |
| G4S Headquarters | Office | 17,550 | 9,179 | 7.7% | 6.9% | 100.0% |
| Lincona | Office | 17,820 | 10,871 | 8.0% | 7.1% | 100.0% |
| Pirita SC | Retail | 9,850 | 5,508 | 4.2% | 5.3% | 90.7% |
| Total Tallinn | 92,620 | 43,367 | 6.1% | 6.0% | 97.2% | |
| Total portfolio | 358,942 | 153,350 | 6.6% | 6.4% | 98.0% |
- Based on the latest valuation as at 31 December 2019 and recognised right-of-use assets.
- Direct property yield (DPY) is calculated by dividing NOI by the acquisition value and subsequent capital expenditure of the property.
- The net initial yield (NIY) is calculated by dividing NOI by the market value of the property.
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
| Euro ‘000 | 01.10.2019-31.12.2019 | 01.10.2018-31.12.2018 | 01.01.2019-31.12.2019 | 01.01.2018-31.12.2018 |
| Rental income | 6,197 | 4,284 | 20,776 | 15,860 |
| Service charge income | 1,397 | 948 | 4,525 | 2,760 |
| Cost of rental activities | (1,959) | (1,303) | (6,082) | (3,816) |
| Net rental income | 5,635 | 3,929 | 19,219 | 14,804 |
| Administrative expenses | (846) | (804) | (3,251) | (2,813) |
| Other operating income | 3 | 26 | 26 | 74 |
| Valuation gains (losses) on investment properties | 375 | 1,534 | (2,064) | 2,014 |
| Operating profit | 5,167 | 4,685 | 13,930 | 14,079 |
| Financial income | 1 | 2 | 5 | 8 |
| Financial expenses | (1,402) | (808) | (4,718) | (2,789) |
| Net financing costs | (1,401) | (806) | (4,713) | (2,781) |
| Profit before tax | 3,766 | 3,879 | 9,217 | 11,298 |
| Income tax charge | (351) | (344) | (426) | (1,308) |
| Profit for the period | 3,415 | 3,535 | 8,791 | 9,990 |
| Other comprehensive income that is or may be reclassified to profit or loss in subsequent periods | ||||
| Net gains (losses) on cash flow hedges | 802 | (588) | (595) | (1,013) |
| Recognition of initial interest rate cap costs | – | – | (33) | |
| Income tax relating to net gains (losses) on cash flow hedges | (48) | 55 | 44 | 97 |
| Other comprehensive income (expense), net of tax, that is or may be reclassified to profit or loss in subsequent periods | 754 | (533) | (551) | (949) |
| Total comprehensive income for the period, net of tax | 4,169 | 3,002 | 8,240 | 9,041 |
| Basic and diluted earnings per unit (Euro) | 0.03 | 0.04 | 0.09 | 0.13 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Euro ‘000 | 31.12.2019 | 31.12.2018 |
| Non-current assets | ||
| Investment properties | 356,575 | 245,160 |
| Investment property under construction | 2,367 | – |
| Derivative financial instruments | 73 | 9 |
| Other non-current assets | 54 | 596 |
| Total non-current assets | 359,069 | 245,765 |
| Current assets | ||
| Trade and other receivables | 1,794 | 2,229 |
| Prepayments | 301 | 154 |
| Other current assets | 734 | 505 |
| Cash and cash equivalents | 9,836 | 12,225 |
| Total current assets | 12,665 | 15,113 |
| Total assets | 371,734 | 260,878 |
| Equity | ||
| Paid in capital | 138,064 | 93,673 |
| Own units | – | (335) |
| Cash flow hedge reserve | (1,556) | (1,005) |
| Retained earnings | 16,010 | 17,472 |
| Total equity | 152,518 | 109,805 |
| Non-current liabilities | ||
| Interest bearing loans and borrowings | 205,718 | 140,401 |
| Deferred tax liabilities | 6,199 | 5,844 |
| Derivative financial instruments | 1,728 | 1,069 |
| Other non-current liabilities | 1,298 | 905 |
| Total non-current liabilities | 214,943 | 148,219 |
| Current liabilities | ||
| Interest bearing loans and borrowings | 414 | 106 |
| Trade and other payables | 3,171 | 2,397 |
| Income tax payable | 8 | – |
| Other current liabilities | 680 | 351 |
| Total current liabilities | 4,273 | 2,854 |
| Total liabilities | 219,216 | 151,073 |
| Total equity and liabilities | 371,734 | 260,878 |
For additional information please contact:
Tarmo Karotam
Baltic Horizon Fund manager
E-mail tarmo.karotam@nh-cap.com
www.baltichorizon.com
Baltic Horizon 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 15:20 EET on 14 February 2020.
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