BALTIC HORIZON FUND CONSOLIDATED UNAUDITED RESULTS FOR Q1 2022

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.

Attachment

• BHF quarterly report Q1 2022