INVL Baltic Real Estate
Notification on material event
Audited results of INVL Baltic Real Estate group of 2019
The audited consolidated net profit of INVL Baltic Real Estate group amounted to EUR 10.40 million, the revenue was EUR 5.90 million for the period of 2019 (for 2018 – consolidated net profit was EUR 3.17 million, revenue was EUR 5.82 million).
The audited net profit of INVL Baltic Real Estate itself amounted to EUR 10.63 million in 2019 and EUR 3.37 million in 2018.
The real estate investment company INVL Baltic Real Estate, which recently sold the IBC Business Centre for EUR 33 million, plans to pay out EUR 20.4 million of dividends to shareholders. The proposal to pay dividends of EUR 1.55 per share was submitted to the shareholders meeting that will take place on 9 April by INVL Asset Management, which manages INVL Baltic Real Estate. Based on the company’s share price on 17 March 2020, the dividend yield is 55%.
“Our main goal is return earned for investors, not the size of assets, so we propose paying out, as dividends, the cash received after the successful transaction. We think that in the current circumstances of the coronavirus pandemic, not freezing excess funds but paying them out to shareholders is positive news which will let them use the resources they receive for new investments or other necessities,” said Vytautas Bakšinskas, a member of the investment committee of INVL Baltic Real Estate.
It is being proposed, he said, that as of next year the company’s dividend policy be adjusted, increasing dividends to about 5% of the future net asset value, which would amount to EUR 0.09 per share.
According to audited figures, in 2019 INVL Baltic Real Estate earned a net profit of EUR 10.4 million, or 3.3 times more than in 2018. The company’s consolidated equity at the end of 2019 was EUR 44 million, or EUR 3.35 per share, and compared to the end of 2018 increased 29% (also taking into account dividends that were paid out).
The 2019 profit and net asset value were also influenced by the transaction to sell the IBC Business Centre which was completed in March this year. The properties sold in the deal were valued on INVL Baltic Real Estate’s balance sheet for the end of 2019 at the transaction price, as required by accounting standards. The impact of the transaction on INVL Baltic Real Estate’s 2019 profit was EUR 7.6 million and its impact on the company’s net asset value per share was EUR 0.58.
INVL Baltic Real Estate’s consolidated net operating income from its properties in 2019 was EUR 2 million, or 33% less than in 2018. That result was significantly influenced by renovated premises, also at the IBC Business Centre, since those ongoing maintenance expenses were assessed as costs. The company’s consolidated revenue was 1.3% bigger than in 2018, at EUR 5.9 million, of which consolidated leasing income from owned properties increased 2.6% to EUR 4.6 million.
“Besides preparation for the sale of the IBC, another important event for us in 2019 was the opening of the Talent Garden Vilnius coworking space,” Vytautas Bakšinskas said.
He said it is estimated that the coronavirus pandemic will not have a significant impact on the company’s operations or indicators. “This factor could reduce income flow at leased properties during 2020, but we don’t think the impact will be significant. We have enough financial resources to meet all our obligations and carry out the work that is planned,” Mr Bakšinskas said.
The value of the company’s property holdings was EUR 71.9 million at the end of 2019 and during last year increased by EUR 13.6 million (including a revaluation of EUR 11.5 million, also assessing the IBC Business Centre). It is calculated that between the spring 2016 completion of a public share offering and the end of 2019, the company earned a high average annual return of nearly 19% for investors.
It is being proposed to INVL Baltic Real Estate shareholders that they consider the possibility of increasing the company’s maximum debt level from 50% of the value of its real estate to the highest level permitted by current legislation of 80%, and change the provider of depository services to Šiaulių Bankas. “We intend to continue maintaining a moderate level of debt, as the figure is currently about 56%, but want to have the possibility of borrowing for bigger projects,” Mr Bakšinskas noted. He said changing the depository was proposed due to lower service fees.
If such decisions are adopted, investors who did not approve them will have the opportunity to sell the shares of INVL Baltic Real Estate which they hold for the net asset value.
For the 9 April shareholders meeting, INVL Baltic Real Estate insistently urges shareholders to use the right to vote in advance in writing.
At the end of 2019, INVL Baltic Real Estate managed real estate in Vilnius and Riga: office and commercial premises at the Vilnius Gates complex in the Lithuanian capital, the IBC Business Centre near Konstitucijos Avenue, office buildings in the Old Town on Vilniaus Street and in Šiaurės Miestelis, and the Dommo Business Park manufacturing, warehouse and office complex beside the Riga bypass. The company’s property holdings had a total area of 56 900 sq. m. and occupancy levels between 67% and 100%. In March this year INVL Baltic Real Estate sold the 22 700 sq. m. IBC Business Centre in Vilnius for EUR 33 million.
Since 22 December 2016, INVL Baltic Real Estate has operated as a closed-end investment company. Management of the company was assumed by INVL Asset Management, one of Lithuania’s leading asset management firms. The company will operate as a closed-end investment company until 2046, with extension possible for another 20 years.
The person authorized to provide additional information:
Real Estate Fund Manager of the Management Company