Published: 2019-11-15 17:00:00 CET
Baltic Horizon Fund / Northern Horizon Capital
Company Announcement

Baltic Horizon Fund Consolidated Un-Audited Results for Q3 2019

Gross Asset Value (GAV)
In Q3 2019, the GAV increased slightly from EUR 344.9 million to EUR 345.3 million compared to the end of Q2 2019. The increase is mainly related to the increase in investment property book value due to capital expenditures and the increase in cash as a result of the newly acquired Galerija Centrs’s positive effect on the Fund’s cash flows over the quarter.

Net Asset Value (NAV)
In Q3 2019, the Fund NAV increased from EUR 131.1 million to EUR 135.2 million compared to the end of Q2 2019. The Fund NAV was positively affected by the Fund’s operational performance over the quarter and capital raising in the amount of EUR 4 million (net equity) through a private placement in July. However, this was offset by a EUR 2.6 million cash distribution to unitholders (EUR 0.026 per unit) and a negative cash flow hedge reserve movement during the quarter.

Net Rental Income and Net Profit
In Q3 2019, the Fund earned a net profit of EUR 3.1 million (EUR 2.2 million during Q3 2018). In Q3 2019, the Fund recorded a EUR 5.4 million net rental income (EUR 3.8 million in Q3 2018). Growth in net rental income and net profit was positively affected by new property acquisitions in 2019 (Duetto II office building and Galerija Centrs shopping centre).

Cash Distributions (dividends)
On 18 October 2019, the Fund declared a EUR 3.06 million quarterly cash distribution to investors, which represents a EUR 0.027 distribution per unit for the Q3 2019 results (EUR 2.62 million or EUR 0.026 per unit for Q2 2019).

Quarterly key figures

Euro ‘000 Q3 2019 Q3 2018 Change (%)
       
Net rental income 5,412 3,840 40.9%
Operating profit 4,550 3,095 47.0%
Net financing costs (1,339) (774) 73.0%
Profit before tax 3,211 2,321 38.3%
Net profit for the period 3,059 2,195 39.4%
       
Weighted average number of units outstanding 100,461,178 79,064,2931 27.1%
Earnings per unit (EUR) 0.03 0.03 -


Euro ‘000 30.09.2019 31.12.2018 Change (%)
       
Investment property in use 336,488 245,160 37.3%
Gross asset value (GAV) 345,327 260,878 32.4%
       
Interest bearing loans 196,947 140,507 40.2%
Total liabilities 210,098 151,073 39.1%
       
Net asset value (NAV) 135,229 109,805 23.2%
Number of units outstanding 100,915,202 78,496,8312 28.6%
Net asset value (NAV) per unit (EUR) 1.3400 1.3988 (4.2%)
Loan-to-Value ratio (LTV) 58.5% 57.3%
Average effective interest rate 2.6% 2.4%
  1. The number of units excludes 278,402 units purchased by the Fund and cancelled in October 2018 as part of the unit buy-back program.
  2. 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 Q3 2019

During Q3 2019, the average actual occupancy of the portfolio was 97.3% (Q2 2019: 95.4%). When all rental guarantees are considered, the effective occupancy rate is 97.7% (Q2 2019: 96.7%). The average direct property yield during Q3 2019 was 6.7% (Q2 2019: 6.8%). The net initial yield for the whole portfolio for Q3 2019 was 6.5% (Q2 2019: 6.5%).

Overview of the Fund’s investment properties as of 30.09.2019

Property name Sector Book value1
Euro ‘000
NLA Direct property yield2 Net initial yield3 Occupancy rate for Q3 2019
Vilnius, Lithuania    
Duetto I Office 16,020 8,498 7.7% 7.2% 98.7%
Duetto II Office 17,900 8,673 7.1% 7.3% 100.0%4
Europa SC Retail 40,403 16,856 6.7% 6.1% 95.6%
Domus Pro Retail Park Retail 16,523 11,247 7.5% 7.1% 98.1%
Domus Pro Office Office 7,530 4,831 8.7% 7.5% 100.0%
Meraki Land   1,700 - - - -
Total Vilnius   100,076 50,105 7.2% 6.8% 97.9%
           
Riga, Latvia          
Upmalas Biroji BC Office 25,220 10,458 6.9% 6.5% 100.0%
Vainodes I Office 21,497 8,052 6.9% 6.9% 100.0%
LNK Centre Office 16,830 7,453 6.4% 6.5% 100.0%
Sky SC Retail 5,424 3,254 7.9% 7.4% 99.4%
Galerija Centrs Retail 75,840 20,022 6.1% 6.0% 95.9%
Total Riga   144,811 49,239 6.5% 6.4% 98.3%
           
Tallinn, Estonia          
Postimaja & CC Plaza Retail 32,140 9,145 4.2% 4.5% 90.8%
Postimaja & CC Plaza Leisure 14,980 8,664 9.0% 7.1% 100.0%
G4S Headquarters Office 17,133 9,179 7.7% 7.0% 100.0%
Lincona Office 17,513 10,871 8.0% 7.2% 99.4%
Pirita SC Retail 9,835 5,508 6.8% 8.6% 92.6%
Total Tallinn   91,601 43,367 6.5% 6.3% 97.0%
Total portfolio   336,488 142,711 6.7% 6.5% 97.7%
  1. Based on the latest valuation as at 30 June 2019 and subsequent capital expenditures.
  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.
  4. Duetto II effective occupancy rate is 100% due to a rental guarantee.

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 

Euro ‘000 01.07.2019-30.09.2019 01.07.2018-30.09.2018 01.01.2019-30.09.2019 01.01.2018-30.09.2018
         
Rental income 5,782 4,012 14,579 11,576
Service charge income 1,476 619 3,128 1,812
Cost of rental activities (1,846) (791) (4,123) (2,513)
Net rental income 5,412 3,840 13,584 10,875
         
Administrative expenses (879) (748) (2,405) (2,009)
Other operating income 17 3 23 48
Valuation gains (losses) on investment properties - - (2,439) 480
Operating profit 4,550 3,095 8,763 9,394
         
Financial income 1 2 4 6
Financial expenses (1,340) (776) (3,316) (1,981)
Net financing costs (1,339) (774) (3,312) (1,975)
         
Profit before tax 3,211 2,321 5,451 7,419
Income tax charge (152) (126) (75) (964)
Profit for the period 3,059 2,195 5,376 6,455
Other comprehensive income that is or may be reclassified to profit or loss in subsequent periods
Net gains (losses) on cash flow hedges (305) 205 (1,397) (425)
Recognition of initial interest rate cap costs - - - (33)
Income tax relating to net gains (losses) on cash flow hedges 17 (37) 92 42
Other comprehensive income (expense), net of tax, that is or may be reclassified to profit or loss in subsequent periods (288) 168 (1,305) (416)
         
Total comprehensive income for the period, net of tax 2,771 2,363 4,071 6,039
         
Basic and diluted earnings per unit (Euro) 0.03 0.03 0.06 0.08

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 

Euro ‘000 30.09.2019 31.12.2018
     
Non-current assets    
Investment properties 336,488 245,160
Derivative financial instruments 33 9
Other non-current assets 96 596
Total non-current assets 336,617 245,765
     
Current assets    
Trade and other receivables 1,958 2,229
Prepayments 247 154
Other current assets 960 505
Cash and cash equivalents 5,545 12,225
Total current assets 8,710 15,113
Total assets 345,327 260,878
     
Equity    
Paid in capital 121,883 93,673
Own units - (335)
Cash flow hedge reserve (2,310) (1,005)
Retained earnings 15,656 17,472
Total equity 135,229 109,805
     
Non-current liabilities    
Interest bearing loans and borrowings 196,559 140,401
Deferred tax liabilities 5,809 5,844
Derivative financial instruments 2,491 1,069
Other non-current liabilities 1,248 905
Total non-current liabilities 206,107 148,219
     
Current liabilities    
Interest bearing loans and borrowings 388 106
Trade and other payables 2,890 2,397
Income tax payable 1 -
Other current liabilities 712 351
Total current liabilities 3,991 2,854
Total liabilities 210,098 151,073
Total equity and liabilities 345,327 260,878

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 17:15 EET on 15 November 2019.

Attachment


BHF quarterly report Q3 2019.pdf