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BALTIC HORIZON FUND CONSOLIDATED UNAUDITED RESULTS FOR Q1 2022

·9-min read
Baltic Horizon Fund / Northern Horizon Capital
Baltic Horizon Fund / Northern Horizon Capital

Management Board of Northern Horizon Capital AS has approved the unaudited consolidated interim financial statements of Baltic Horizon Fund (the Fund) for the three months of 2022.

Distributions to unitholders for Q1 2022 Fund results
On 28 April 2022, the Fund declared a cash distribution of EUR 1,555 thousand (EUR 0.013 per unit) to the Fund unitholders for Q1 2022 results. The payout also represents a 6.3% rolling distribution yield for the past 12 months based on the closing unit price of the last day of Q1 2022 on the Nasdaq Tallinn Stock Exchange.

Net result and net rental income
The Group recorded a net profit of EUR 2.0 million for Q1 2022 against a net profit of EUR 1.9 million for Q1 2021. The net result was significantly impacted by strong recovery of the Galerija Centrs operating performance as fewer COVID-19 rent reliefs have been granted to tenants in 2022. The positive impact of the increase in net rental income was also influenced by a decrease in administrative expenses. Earnings per unit for Q1 2022 were EUR 0.02 (Q1 2021: EUR 0.02).

The Group earned net rental income of EUR 4.2 million in both Q1 2022 and Q1 2021. The results for Q1 2021 still included EUR 0.3 million of net rental income from G4S Headquarters, which was sold in Q4 2021 and did not contribute to Q1 2022 results. Rent indexations and recovery of income improved the net rental income of the same portfolio mix (like-for-like portfolio).

Gross Asset Value (GAV)
At the end of Q1 2022, the Fund’s GAV was EUR 345.6 million (31 December 2021: EUR 346.3 million). The change is mainly related to a dividend pay-out in Q1 2022. The Fund made capital investments (EUR 1.9 million) in the Meraki office building development project during Q1 2022. The Fund aims to carry on with the construction of the Meraki office building throughout 2022 and 2023. An additional EUR 2.2 million was invested in other (re)development projects.

Net Asset Value (NAV)
At the end of Q1 2022, the Fund’s NAV slightly increased to EUR 133.0 million (31 December 2021: EUR 132.6 million). The increase in operational performance and positive cash flow hedge reserve movement of EUR 0.7 million over the quarter was offset by a EUR 2.3 million dividend distribution to the unitholders. As at 31 March 2022, IFRS NAV per unit stood at EUR 1.1114 (31 December 2021: EUR 1.1082), while EPRA net tangible assets and EPRA net reinstatement value were EUR 1.1902 per unit (31 December 2021: EUR 1.1884). EPRA net disposal value was EUR 1.1100 per unit (31 December 2021: EUR 1.1086).

Investment properties
The occupancy rate as of 31 March 2022 was 92.4% (31 December 2021: 92.1%). The overall occupancy rates in the portfolio rose after the successful launch of the North Star office hotel and filling the premises with small tenants. Increasing occupancy figures were supplemented with new leases in Lincona and Europa. Occupancy rates in the office segment remain strong at around 98% after the conclusion of new leases. Positive momentum in office leasing is expected to continue in Q2 2022. Retail leasing teams have been expanded to fasten the leasing process. The Fund is having in-depth negotiations with potential anchor tenants for shopping centres. The average direct property yield during Q1 2022 increased notably to 5.0% (Q4 2021: 4.5%). The net initial yield for the whole portfolio for Q1 2022 was 5.3% (Q4 2021: 4.8%). Property yields increased compared to Q4 2021 after a strong recovery of Galerija Centrs results following the lift of lockdowns at the end of 2021 and positive rent indexations across the portfolio.

The Baltic Horizon Fund portfolio consists of 14 cash flow generating investment properties in the Baltic capitals and an investment property under construction on the Meraki land plot. At the end of Q1 2022, the fair value of the Fund’s portfolio was EUR 331.8 million (31 December 2021: EUR 327.4 million) and incorporated a total net leasable area of 144,071 sq. m. During Q1 2022, the Fund invested EUR 0.3 million in the existing property portfolio and EUR 4.1 million in the reconstruction or development projects.

Key earnings figures

EUR ‘000

Q1 2022

Q1 2021

Change (%)

Net rental income

4,193

4,173

0.5%

Administrative expenses

(659)

(745)

(11.5%)

Other operating income

7

-

-

Valuation losses on investment properties

(6)

(4)

50.0%

Operating profit

3,535

3,424

3.2%

Net financing costs

(1,442)

(1,390)

(3.7%)

Profit before tax

2,093

2,034

2.9%

Income tax

(97)

(129)

(24.8%)

Net profit for the period

1,996

1,905

4.8%

Weighted average number of units outstanding (units)

119,635,429

119,635,429

-

Earnings per unit (EUR)

0.02

0.02

-

Key financial position figures

EUR ‘000

31.03.2022

31.12.2021

Change (%)

Investment properties in use

318,430

315,959

0.8%

Investment property under construction

13,393

11,400

17.5%

Gross asset value (GAV)

345,592

346,338

(0.2%)

Interest-bearing loans and bonds

198,425

198,571

(0.1%)

Total liabilities

212,628

213,754

(0.5%)

IFRS Net asset value (IFRS NAV)

132,964

132,584

0.3%

EPRA Net Reinstatement Value (EPRA NRV)

142,387

142,176

0.1%

Number of units outstanding (units)

119,635,429

119,635,429

-

IFRS Net asset value (IFRS NAV) per unit (EUR)

1.1114

1.1082

0.3%

EPRA Net Reinstatement Value (EPRA NRV) per unit (EUR)

1.1902

1.1884

0.2%

Loan-to-Value ratio (%)

59.8%

60.7%

-

Average effective interest rate (%)

2.8%

2.7%

-

Overview of the Fund’s investment properties as of 31 March 2022

Property name

Sector

Fair value1
(EUR ‘000)

NLA
(sq. m)

Direct property yield
Q1 20222

Net initial yield
Q1 20223

Occupancy rate

Vilnius, Lithuania

Duetto I

Office

17,347

8,587

8.0%

6.9%

100.0%

Duetto II

Office

19,683

8,674

7.6%

7.1%

100.0%

Europa SC

Retail

38,951

16,844

1.3%

1.4%

81.8%

Domus Pro Retail Park

Retail

16,268

11,226

8.0%

7.8%

98.7%

Domus Pro Office

Office

7,823

4,831

8.3%

6.8%

100.0%

North Star

Office

20,031

10,550

6.2%

6.5%

97.1%

Meraki Development

13,393

-

-

-

-

Total Vilnius

133,496

60,712

5.3%

5.2%

94.2%

Riga, Latvia

Upmalas Biroji BC

Office

21,959

10,459

7.6%

8.3%

100.0%

Vainodes I

Office

18,161

8,052

6.5%

7.8%

100.0%

LNK Centre

Office

16,840

7,452

6.4%

6.6%

100.0%

Sky SC

Retail

5,106

3,249

8.2%

8.2%

97.4%

Galerija Centrs

Retail

65,576

20,022

3.2%

3.6%

74.1%

Total Riga

127,642

49,234

5.0%

5.6%

89.3%

Tallinn, Estonia

Postimaja & CC Plaza complex

Retail

29,775

9,147

2.6%

3.2%

93.9%

Postimaja & CC Plaza complex

Leisure

14,442

8,664

7.2%

5.9%

100.0%

Lincona

Office

16,996

10,870

6.6%

6.1%

90.8%

Pirita SC

Retail

9,472

5,444

4.5%

5.9%

89.2%

Total Tallinn

70,685

34,125

4.5%

4.8%

93.7%

Total portfolio

331,823

144,071

5.0%

5.3%

92.4%

  1. Based on the latest valuation as at 31 March 2022, subsequent capital expenditure and recognised right-of-use assets.

  2. Direct property yield (DPY) is calculated by dividing annualized NOI by the acquisition value and subsequent capital expenditure of the property.

  3. The net initial yield (NIY) is calculated by dividing annualized NOI by the market value of the property.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

EUR ‘000

01.01.2022-
31.03.2022

01.01.2021-
31.03.2021

Rental income

4,959

4,677

Service charge income

1,304

1,217

Cost of rental activities

(2,070)

(1,721)

Net rental income

4,193

4,173

Administrative expenses

(659)

(745)

Other operating income

7

-

Valuation losses on investment properties

(6)

(4)

Operating profit

3,535

3,424

Financial income

-

-

Financial expenses

(1,442)

(1,390)

Net financial expenses

(1,442)

(1,390)

Profit before tax

2,093

2,034

Income tax charge

(97)

(129)

Profit for the period

1,996

1,905

Other comprehensive income that is or may be reclassified to profit or loss in subsequent periods

Net gain on cash flow hedges

721

210

Income tax relating to net gain on cash flow hedges

(64)

(15)

Other comprehensive income, net of tax, that is or may be reclassified to profit or loss in subsequent periods

657

195

Total comprehensive income for the period, net of tax

2,653

2,100

Basic and diluted earnings per unit (EUR)

0.02

0.02

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

EUR ‘000

31.03.2022

31.12.2021

Non-current assets

Investment properties

318,430

315,959

Investment property under construction

13,393

11,400

Intangible assets

8

9

Property, plant and equipment

2

2

Other non-current assets

23

23

Total non-current assets

331,856

327,393

Current assets

Trade and other receivables

2,959

2,708

Prepayments

315

137

Cash and cash equivalents

10,462

16,100

Total current assets

13,736

18,945

Total assets

345,592

346,338

Equity

Paid in capital

145,200

145,200

Cash flow hedge reserve

(172)

(829)

Retained earnings

(12,064)

(11,787)

Total equity

132,964

132,584

Non-current liabilities

Interest-bearing loans and borrowings

152,806

157,471

Deferred tax liabilities

6,456

6,297

Derivative financial instruments

94

756

Other non-current liabilities

1,185

1,103

Total non-current liabilities

160,541

165,627

Current liabilities

Interest-bearing loans and borrowings

46,189

41,676

Trade and other payables

5,095

5,223

Income tax payable

8

5

Derivative financial instruments

50

109

Other current liabilities

745

1,114

Total current liabilities

52,087

48,127

Total liabilities

212,628

213,754

Total equity and liabilities

345,592

346,338


For more information, please contact:

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 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 22:30 EET on 9 May 2022.


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