Published: 2021-02-15 22:58:00 CET
Baltic Horizon Fund / Northern Horizon Capital
Company Announcement

Baltic Horizon Fund Consolidated Unaudited Results for Q4 2020

Management Board of Northern Horizon Capital AS has approved the unaudited consolidated interim financial statements of Baltic Horizon Fund (the Fund) for the twelve months of 2020.

Impact of COVID-19 pandemic
At the beginning of 2020, a new coronavirus (COVID-19) started spreading all over the world, which has had an impact on businesses and economies, including in the Baltics. It is evident that the operating results of Q2-Q4 2020 and property valuations were affected by the COVID-19 effects on the tenants’ financial performance and the relief measures taken to deal with the pandemic. However, based on the currently available information, the Management Company believes that the COVID-19 pandemic should rather have a temporary effect on the Fund’s results. Broad portfolio diversification allows the Fund to limit the COVID-19 impact on the whole portfolio and maintain healthy consolidated operational performance.

The Fund has opted to retain approx. EUR 4.4 million of distributable cash flow from the results to strengthen the Fund’s financial position. The management team will continue to actively monitor the economic impact of the pandemic and reassess future distribution levels depending on the upcoming operating results.

In summary, it may be concluded that the COVID virus induced lockdown in the Baltics has impacted mainly Baltic Horizon’s centrally located retail and entertainment centres. Retail assets located in the central business districts (Postimaja, Europa and Galerija Centrs) accounted for 26.5% of total portfolio NOI in Q4 2020. Remainder of the portfolio has performed well, as expected.

Secondary public offering

On 23 October 2020, the Fund announced the issue of new units in a secondary public offering. In total, gross equity of EUR 7.2 million was raised through the transaction. After the transaction, the total number of Fund units registered in the Estonian Register of Securities increased to 119,635,429.

Distributions to unitholders for Q3 2020 and Q4 2020 Fund results

On 20 October 2020, the Fund declared a cash distribution of EUR 3,111 thousand (EUR 0.026 per unit) to the Fund unitholders for Q3 2020 results. This represents a 2.25% return on the weighted average Q3 2020 net asset value to its unitholders.

On 4 February 2021, the Fund declared a cash distribution of EUR 1,316 thousand (EUR 0.011 per unit) to the Fund unitholders for Q4 2020 results. This represents a 0.93% return on the weighted average Q4 2020 net asset value to its unitholders.

Total dividends distributed during 2020 was EUR 9,7 million (EUR 10,25 million in 2019). In addition, the fund has unpaid dividend reserve of EUR 4,4 million by the end of 2020.

Dividend capacity calculation

The Fund reduced cash distribution during some quarters in 2020 due to COVID-19 induced lockdowns. Generated net cash flow (GNCF) for the entire year of 2020 was a commendable EUR 11,4 million (EUR 11,0 million in 2019) and reached EUR 0.1 per unit (EUR 0,11 per unit in 2019) despite the shopping centre lockdowns. 

EUR ’000Q4 2019Q1 2020Q2 2020Q3 2020Q4 2020
(+) Net rental income5,6355,7724,6184,7994,745
(-) Fund administrative expenses(846)(889)(634)(682)(713)
(-) External interest expenses(1,346)(1,331)(1,327)(1,327)(1,362)
(-) CAPEX expenditure1(225)(95)(97)(230)(131)
(+) Added back listing related expenses-392911485
(+) Added back acquisition related expenses----26
Generated net cash flow (GNCF)3,218 3,496 2,5892,6742,650
GNCF per weighted unit (EUR)0.029 0.031 0.023 0.024 0.022
12-months rolling GNCF yield2 (%)8.6% 11.5% 9.6% 9.4% 8.6%
Dividends declared for the period3,1751,7011,7013,1111,316
Dividends declared per unit3 (EUR)0.0280.0150.0150.0260.011
12-months rolling dividend yield2 (%)8.0%9.6%7.2%7.5%5.8%
  1. The table provides actual capital expenditures for the quarter. Future dividend distributions to unitholders are aimed to be based on the annual budgeted capital expenditure plans equalised for each quarter. This will reduce the quarterly volatility of cash distributions to unitholders.
  2. 12-month rolling GNCF and dividend yields are based on the closing market price of the unit as at the end of the quarter (Q4 2020: closing market price of the unit as of 31 December 2020).
  3. Based on the number of units entitled to dividends.

Net profit and net rental income
Portfolio properties in the office segment contributed 55.8% (2019: 50.8%) of net rental income in 2020 followed by the retail segment with 40.1% (2019: 43.8%) and the leisure segment with 4.1% (2019: 5.4%).Retail assets located in the central business districts (Postimaja, Europa and Galerija Centrs) accounted for 29.2% of total portfolio net rental income in 2020. Total net rental income attributable to neighbourhood shopping centres accounted for 10.9% in 2020.

In 2020, the Group earned net rental income of EUR 19.9 million exceeding the previous year’s net rental income for the same period by EUR 0.7 million or 3.7% (2019: 19.2 million). The increase was achieved through new acquisitions that were made following the capital raisings in 2019. The acquisition of Galerija Centrs and North Star had a significant effect on the Group’s net rental income growth in 2020 as compared to 2019, albeit rental income growth in Q2-Q4 2020 was slower due to relief measures granted to tenants during the COVID-19 pandemic.

During 2020, the Group recorded a net loss of EUR 13.5 million against a net profit of EUR 8.8 million for 2019.  The net result was impacted by the negative valuation result of EUR 25.2 million recognized in June and December 2020. The negative impact of valuation losses on investment properties was offset by an increase in net rental income, other operating income and a slight decrease in administrative expenses. Excluding the valuation impact on the net result, the net profit for 2020 would have amounted to EUR 11.7 million (2019: EUR 10.9 million). Earnings per unit excluding valuation losses on investment properties would have amounted to EUR 0.10 (2019: EUR 0.11).

On an EPRA like-for-like basis, portfolio net rental income decreased by 7.4% year on year mainly due to weaker performance in retail and leisure segments. The decrease was offset by the relatively stable performance of the office segment which remained largely unaffected by the lockdown in the Baltic States.

During 2020, investment properties in Latvia and Lithuania contributed 38.3% (2019: 37.2%) and 36.4% (2019: 35.0%) of net rental income respectively, while investment properties in Estonia contributed 25.3% (2019: 27.8%).

Gross Asset Value (GAV)
At the end of December 2020, the GAV decreased to EUR 355.6 million (31 December 2019: EUR 371.7 million) which was a drop of 4.3% over 2020. The Group made a capital investment (EUR 1.4 million) in the Meraki office building development project during Q4 2020. The Fund aims to continue the construction of the Meraki office building throughout 2021 and welcome new office tenants looking for efficient modern work spaces. The Management Company will continue to actively monitor the economic impact of the pandemic and ensure sufficient liquidity levels during the construction period.

Net Asset Value (NAV)
At the end of December 2020, the Fund net asset value (NAV) decreased to EUR 136.3 million (31 December 2019: EUR 152.5 million) as a result of the negative portfolio revaluation which was impacted by the high market uncertainty surrounding the COVID-19 pandemic. Compared to the year-end 2019 NAV, the Fund’s NAV decreased by 10.6%. Positive net operating income of EUR 19,9 million over the period was offset by EUR 25.2 million valuation losses, EUR 9.7 million dividend distributions to the unitholders and a negative cash flow hedge reserve movement of EUR 0.1 million. At 31 December 2020, NAV per unit stood at EUR 1.1395 (31 December 2019: EUR 1.3451), while NAV per unit based on EPRA standards was EUR 1.2219 (31 December 2019: EUR 1.4333).

Investment properties
The Baltic Horizon Fund portfolio consists of 15 cash flow investment properties in the Baltic capitals and investment property under construction on the Meraki land plot. At the end of Q4 2020, the fair value of the Fund’s portfolio was EUR 340.0 million (31 December 2019: EUR 358.9 million) and incorporated a total net leasable area of 153,345 sq. m. During Q4 2020, the Group invested EUR 0.4 million in the existing property portfolio and an additional EUR 1.4 million in the Meraki development project.

Interest bearing loans and bonds
Interest bearing loans and bonds (excluding lease liabilities) remained at a similar level of EUR 205.6 million compared to year-end 2019 figures (31 December 2019: EUR 205.8 million). Outstanding bank loans decreased slightly due to regular bank loan amortization. Annual loan amortization forms 0.2% of total debt outstanding. 

Financial covenants for bonds

Equity Ratio 

Debt Service Coverage Ratio 

> 1.20
  1. On 28 July, the bondholders adopted the decision by the way of written procedure to temporarily reduce the equity ratio bond covenant to 25% or greater, until 31 July 2021

Cash flow
Cash inflow from core operating activities for 2020 amounted to EUR 16.1 million (2019:  cash inflow of EUR 16.4 million). Cash outflow from investing activities was EUR 4.3 million (2019: cash outflow of EUR 78.2 million) due to subsequent capital expenditure on existing portfolio properties and investments in the Meraki development project. Cash outflow from financing activities was EUR 8.3 million (2019: cash inflow of EUR 59.4 million). During 2020, the Fund made four cash distributions of EUR 9.7 million and paid regular interest on bank loans and bonds. At the end of December 2020, the Fund’s consolidated cash and cash equivalents amounted to EUR 13.3 million (31 December 2019: EUR 9.8 million) which demonstrates sufficient liquidity and financial flexibility.

Key earnings figures

EUR ‘000    Q4 2020Q4 2019Change (%)
Net rental income    4,7455,635 (15.8%)
Administrative expenses   (713)(846)(15.7%)
Other operating income   183 500%
Valuation (losses) on investment properties (9,488)375(2,630.1%)
Operating (loss) profit    (5,438) 5,167 (205.2%)
Net financing costs    (1,406)(1,401)0.4%
(Loss) profit before tax    (6,844) 3,766 (281.7%)
Income tax    166(351)(147.3%)
Net (loss) profit for the period   (6,678)3,415 (295.5%)
Weighted average number of units outstanding (units) 118,124,947112,686,1394.8%
Earnings per unit (EUR)   (0.06)0.03(300.0%)

Key financial position figures

EUR ‘000    31.12.202031.12.2019Change (%)
Investment properties in use   334,518356,575(6.2%)
Investment property under construction  5,4742,367131.3%
Gross asset value (GAV)   355,602371,734 (4.3%)
Interest bearing loans and bonds   205,604205,827(0.1%)
Total liabilities    219,281 219,216 0.0%
Net asset value (NAV)   136,321 152,518 (10.6%)
Number of units outstanding (units)   119,635,429113,387,5255.5%
IFRS Net asset value (IFRS NAV) per unit (EUR) 1.13951.3451 (15.3%)
EPRA Net reinvestment value (EPRA NRV) per unit (EUR) 1.22191.4333(14.7%)
EPRA Net tangible assets (EPRA NTA) per unit (EUR) 1.22191.4333(14.7%)
EPRA Net disposal value (EPRA NDV) per unit (EUR) 1.14351.3400(14.7%)
EPRA Net asset value (EPRA NAV) per unit (EUR) 1.22191.4333(14.7%)
Loan-to-Value ratio (%)   60.5%57.3%-
Average effective interest rate (%)   2.6%2.6%-

Property performance

The average direct property yield during Q4 2020 remained stable at 5.5% (Q3 2020: 5.5%). The net initial yield for the whole portfolio for Q4 2020 was 5.6% (Q3 2020: 5.6%). Property yields showed signs of improvement up until December 2020, yet December results suffered due to lockdowns and yields ultimately remained stable compared to Q3 2020. Turnover rents from retail tenants decreased during December due to lockdowns in Latvia and Lithuania. Simultaneously the Fund granted additional rent concessions to tenants whose operations were restricted by government regulations. Compared to pre-COVID-19 pandemic performance levels, the leisure and retail segments took the biggest hit mainly due to the COVID-19 forced discounts, while the office segment continued to perform well and remained largely unaffected. The average rental rate for the whole portfolio for Q4 2020 was EUR 11.7 per sq. m.

During Q4 2020, the average actual occupancy of the portfolio was 94.5% (Q3 2020: 94.6%). Taking into account Duetto II rental guarantee, the effective occupancy rate was 94.5% (Q3 2020: 94.6%). The occupancy rate as of 31 December 2020 was 94.3% (30 September 2020: 94.7%). The Fund’s tenant base remains strong despite several tenants vacating premises in Q3 and Q4 2020. The Fund signed a new rental agreement with F8 Outlet in Domus PRO Retail Park which increased the occupancy level of property to 100.0% during Q4 2020. Occupancy rates in the office segment still remain strong albeit Lithuania Tax Inspectorate vacated part of their premises in North Star resulting in a minor negative effect on the occupancy levels.

Overview of the Fund’s investment properties as of 31 December 2020

Property nameSectorFair value1
(EUR ‘000)
(sq. m.)
Direct property yield
Q4 20202
Net initial yield
Q4 20203
Occupancy rate for
Q4 2020
Vilnius, Lithuania      
Duetto IOffice16,4198,5878.0%7.3%100.0%
Duetto IIOffice18,7658,6747.4%7.3%100.0%
Europa SCRetail38,81116,8565.0%4.7%90.1%
Domus Pro Retail ParkRetail16,09011,2477.5%7.2%100.0%
Domus Pro OfficeOffice7,5904,8318.9%7.6%100.0%
North StarOffice19,13310,5506.8%7.3%95.4%
Meraki Development 5,474---
Total Vilnius 122,28260,745 6.7% 6.4% 96.5%
Riga, Latvia      
Upmalas Biroji BCOffice23,47410,4586.6%6.8%93.5%
Vainodes IOffice19,9708,0526.9%7.2%100.0%
LNK CentreOffice16,0607,4536.3%6.6%100.0%
Sky SCRetail4,9703,2547.9%8.0%98.6%
Galerija CentrsRetail67,44620,0222.7%2.9%84.8%
Total Riga 131,920 49,239 4.6% 4.9% 92.3%
Tallinn, Estonia      
Postimaja & CC Plaza complexRetail29,7709,1453.2%3.7%95.1%
Postimaja & CC Plaza complexLeisure14,1708,6645.8%4.9%100.0%
G4S HeadquartersOffice16,1609,1797.9%7.4%100.0%
Pirita SCRetail9,5805,5085.4%7.1%81.1%
Total Tallinn 85,790 43,361 5.3% 5.5% 94.1%
Total portfolio 339,992 153,345 5.5% 5.6% 94.5%
  1. Based on the latest valuation as at 31 December 2020 and recognised right-of-use assets.  
  2. Direct property yield (DPY) is calculated by dividing NOI by the acquisition value and subsequent capital expenditure of the property.
  3. The net initial yield (NIY) is calculated by dividing NOI by the market value of the property.


EUR ‘00001.10.2020-31.12.202001.10.2019-31.12.201901.01.2020-31.12.202001.01.2019-31.12.2019
Rental income5,148 6,197 21,697 20,776
Service charge income1,241 1,397 4,990 4,525
Cost of rental activities(1,644)(1,959)(6,753)(6,082)
Net rental income4,745 5,635 19,934 19,219
Administrative expenses(713)(846)(2,918)(3,251)
Other operating income18 3 204 26
Valuation (losses) gains on investment properties(9,488)375(25,245)(2,064)
Operating (loss) profit(5,438)5,167 (8,025)13,930
Financial income-1 3 5
Financial expenses(1,406)(1,402)(5,524)(4,718)
Net financing costs(1,406)(1,401)(5,521)(4,713)
(Loss) profit before tax(6,844)3,766(13,546)9,217
Income tax charge166 (351)5 (426)
(Loss) profit for the period(6,678)3,415 (13,541)8,791
Other comprehensive income that is or may be reclassified to profit or loss in subsequent periods
Net gains (losses) on cash flow hedges119802(108)(595)
Income tax relating to net gains (losses) on cash flow hedges(10)(48)344
Other comprehensive income (expense), net of tax, that is or may be reclassified to profit or loss in subsequent periods109754(105)(551)
Total comprehensive income (expense) for the period, net of tax(6,569) 4,169(13,646)8,240
Basic and diluted earnings per unit (EUR)          (0.06) 0.03(0.12)0.09


EUR ‘00031.12.202031.12.2019
Non-current assets  
Investment properties334,518 356,575
Investment property under construction5,474 2,367
Property, plant and equipment2-
Derivative financial instruments- 73
Other non-current assets22 54
Total non-current assets340,016 359,069
Current assets  
Trade and other receivables1,901 1,794
Prepayments352 301
Other current assets- 734
Cash and cash equivalents13,333 9,836
Total current assets15,586 12,665
Total assets355,602 371,734
Paid in capital145,200 138,064
Cash flow hedge reserve(1,661)(1,556)
Retained earnings(7,218)16,010
Total equity136,321 152,518
Non-current liabilities  
Interest bearing loans and borrowings195,670 205,718
Deferred tax liabilities6,009 6,199
Derivative financial instruments1,736 1,728
Other non-current liabilities1,026 1,298
Total non-current liabilities204,441 214,943
Current liabilities  
Interest bearing loans and borrowings10,222 414
Trade and other payables3,640 3,171
Income tax payable1 8
Derivative financial instruments27 -
Other current liabilities950 680
Total current liabilities14,840 4,273
Total liabilities219,281 219,216
Total equity and liabilities355,602 371,734

For more information, please contact: 

Tarmo Karotam
Baltic Horizon Fund manager

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 23:40 EET on 15 February 2021.


BHF quarterly report Q4 2020.pdf