Management Board of Northern Horizon Capital AS has approved the unaudited consolidated interim financial statements of Baltic Horizon Fund (the Fund) for the first nine months of 2023.

Leasing activity
Throughout Q1-Q3 2023, the Fund secured lease extensions with anchor tenants in retail assets. Notably, the anchor grocery tenant Rimi extended its leases on the same favourable terms in both Postimaja and Galerija Centrs. The H&M store will be upgraded in Postimaja to include the H&M Home concept in November 2023, while ARKET will open in Galerija Centrs in December 2023.

Meanwhile, Europa SC demonstrated a surge in letting activity during Q1-Q3 2023, with the Fund successfully securing deals for a total of 2,941 sq. m with thirteen tenants, including prominent names like Pi Pilates, Optometrijos Centras, Codekus and others. In addition, the Fund recently finalized a new lease agreement with a prominent anchor tenant IKI  at Europa SC, signing a ten-year lease for an approximate total lettable area of 1,900 sq. m.  The opening of the new anchor tenant’s store, which will be at the heart of the upgraded concept of the shopping centre, is anticipated to take place early next year.

In response to evolving market dynamics, the Fund is actively engaged in reletting efforts for current office vacancies and forthcoming office spaces, particularly in light of EMERGN’s decision to reduce their rented area in LNK and the SEB exit from Upmalas Biroji. Proactive measures are being taken to fill these vacancies, with the Fund securing the Latvian State Police as a tenant for approximately 4,060 sq. m for 12 years in Upmalas Biroji to partially offset the vacancy from SEB premises. The agreement with the Latvian State Police was signed in November and the move is expected early next year. The occupancy rate of Upmalas Biroji wil increase to 60% following the takeover of these premises. Additionally, intense negotiations are underway to ensure maximum occupancy in the Lincona building with a newly signed deal with Pet24 to open a pet store on the ground floor.


An important milestone in our financial journey was the refinancing of our EUR 50 million bond issue in Q2 2023. We initiated a new bond issue, raising EUR 42 million to optimize our capital structure. The first tranche, amounting to EUR 20 million, matures in May 2024. Following the disposal of the Duetto properties, the Fund proactively redeemed EUR 7.5 million of the first tranche in August 2023. The Fund’s management team remains resolute in reducing financial leverage at the earliest viable opportunity.

Our management team remains committed to exploring additional divestment and refinancing opportunities aimed at repaying the outstanding EUR 12.5 million of the first tranche before its maturity date. As part of this commitment, we are actively engaged in negotiations with multiple financial institutions to secure additional funds and negotiating potential asset disposals, which would potentially facilitate the redemption of bonds.

Looking ahead, the Fund is determined to execute multiple early redemptions of bonds at the end of 2023/in early 2024. These actions are aligned with our overarching strategy to gradually reduce leverage levels, with the ultimate goal of reaching a leverage ratio of approximately 50% following all planned refinancing activities in the upcoming year.

Net result and net rental income
The Group recorded a net loss of EUR 15.2 million for Q1-Q3 2023 against a net profit of EUR 6.2 million for the corresponding period in 2022. The net result was strongly impacted by the negative valuation result of EUR 14.6 million. Meanwhile in Q1-Q3 2022, the valuation resulted in a net fair value gain of EUR 0.2 million. The sale of the shares in BH Domus Pro UAB which owns a retail park and an office building and BH Duetto UAB, which owns two office buildings, resulted in the loss on disposal of EUR 3.8 million. The net result was also impacted by the higher financial expenses. Earnings per unit for Q1-Q3 2023 were negative at EUR -0.13 (Q1-Q3 2022: positive at EUR 0.05).

The Group earned net rental income of EUR 11.7 million in Q1-Q3 2023 (Q1-Q3 2022: EUR 13.0 million). The results for 2023 include two months’ net rental income of the Domus Pro Retail and Office property (EUR 0.3 million) and five months’ net rental income of the Duetto properties (EUR 1.2 million), which were sold in February and May 2023, respectively. Rent indexations and the recovery of income improved the net rental income of the same portfolio mix (like-for-like portfolio).

On an EPRA like-for-like basis, portfolio net rental income increased by 4.9% year on year, mainly due to the recovery in the retail segment.

BREEAM In-Use certificates
Baltic Horizon Fund has obtained BREEAM In-Use certificates for its Estonian retail assets: Postimaja, CC Plaza and Pirita – have all achieved BREEAM In-Use certification with a ‘Good’ rating. The BREEAM In-Use certificate is one of the most important instruments for assessing sustainable commercial construction in Europe. It has been a key ESG priority for the Fund to certify its properties with the internationally recognized BREEAM standards. In 2021, the portfolio of office buildings received BREEAM certification, and in 2022, a costed retail portfolio certification plan was implemented with the goal to have a 100% certified portfolio by the end of 2023.

GRESB benchmarking
In Q3 2023, Baltic Horizon maintained the GRESB 4 star rating for the second year in a row. In the assessment, the fund achieved a total score of 82 out of 100, representing the third highest GRESB score in the ‘Northern Europe | Diversified – Office/Retail | Listed’ peer group. The GRESB Real Estate Assessment is an investor-driven global ESG benchmark and reporting framework for listed property companies, private property funds, developers and investors that invest directly in real estate. The achievement of GRESB ratings confirms the Fund’s continuous efforts in the ESG field.

Gross Asset Value (GAV)
At the end of Q3 2023, the Fund’s GAV was EUR 269.5 million (31 December 2022: EUR 344.0 million), 21.7% lower than at the end of the previous period. The decrease is mainly related to the sale of the shares in BH Domus Pro UAB and BH Duetto UAB.

Net Asset Value (NAV)
At the end of Q3 2023, the Fund’s NAV was EUR 118.0 million (31 December 2022: EUR 133.7 million). Compared to the year-end 2022, the Fund’s NAV decreased by 11.7%. The increase in operational performance was offset by a EUR 14.6 million property valuation loss and EUR 3.8 million loss from the disposal of the BH Domus Pro UAB and BH Duetto UAB shares. Excluding the impact of valuations, the NAV at the end of Q3 2023 would have been EUR 132.2 million or EUR 1.1049 per unit. As of 30 September 2023, IFRS NAV per unit decreased to EUR 0.9862 (31 December 2022: EUR 1.1172), while EPRA net tangible assets and EPRA net reinstatement value were EUR 1.0195 per unit (31 December 2022: EUR 1.1865). EPRA net disposal value was EUR 0.9827 per unit (31 December 2022: EUR 1.1143).

Investment properties
At the end of Q3 2023, the Baltic Horizon Fund portfolio consisted of 12 cash flow generating investment properties in the Baltic capitals. The fair value of the Fund’s portfolio was EUR 256.7 million (31 December 2022: EUR 333.1 million) and incorporated a total net leasable area of 119.2 thousand sq. m.  During Q1-Q3 2023 the Group sold the Domus PRO buildings for approximately EUR 23.5 million and the Duetto I and Duetto II buildings for approximately EUR 37 million, invested EUR 1.2 million in reconstruction projects and EUR 1.2 million in the existing property portfolio.

Interest-bearing loans and bonds
As of 30 September 2023 interest-bearing loans and bonds (excluding lease liabilities) were EUR 144.0 million (31 December 2022: EUR 194.6 million). Outstanding bank loans decreased due to the repayment of the Domus Pro and Duetto loans, part of Europa and Kontor loans and regular bank loan amortisation. Also, the Fund redeemed a part of the bonds in the amount of EUR 7.5 million on 1 August 2023. The redemption was accompanied by the reduction of the nominal value of the bonds to EUR 82,142.85 per bond. The total nominal amount of the bonds before the redemption was EUR 42,000,000 and after the redemption is EUR 34,499,997. Annual loan amortisation accounted for 1.4% of total debt outstanding.

Cash flow
Cash inflow from core operating activities in Q1-Q3 2023 amounted to EUR 8.7 million (Q1-Q3 2022: cash inflow of EUR 10.8 million). Cash inflow from investing activities was EUR 21.4 million (Q1-Q3 2022:  cash outflow of EUR 11.1 million) due to the sale of the shares in BH Domus Pro UAB and BH Duetto UAB. Cash outflow from financing activities was EUR 27.5 million (Q1-Q3 2022: cash outflow of EUR 10.9 million). In Q1-Q3 2023, the Fund redeemed and issued bonds, repaid the Domus Pro and part of the Europa loan, and paid regular interest on bank loans and bonds. In March 2023 the Fund repaid the Domus Pro loan (EUR 11.0 million) and EUR 6.0 million of the Europa loan using the proceeds from the sale of the shares in BH Domus Pro UAB. In May the Fund redeemed its EUR 50 million unsecured 5-year bond issue, completed a private placement of 5-year bonds and issued bonds in the total volume of EUR 42 million. In August the Fund early redeemed a part of the bonds in the amount of EUR 7.5 million. During August, the Fund successfully refinanced the Kontor SIA loan until 2028, reducing the original Kontor SIA loan by EUR 1.2 million. At the end of Q3 2023, the Fund’s consolidated cash and cash equivalents amounted to EUR 7.9 million (31 December 2022: EUR 5.3 million). Operating costs are fully covered by cash flows generated by rental activities.

Key earnings figures

EUR ‘000 Q3 2023 Q3 2022 Change (%)
Net rental income 3,228 4,298 (24.9%)
Administrative expenses (572) (752) (23.9%)
Losses on disposal of investment properties (59)
Valuation gains (losses) on investment properties (3) (14) (78.6%)
Operating profit (loss) 2,594 3,532 (26.6%)
Net financial expenses (2,817) (1,502) 87.5%
Profit (loss) before tax (223) 2,030 (111.0%)
Income tax 12 (132) 109.1%
Net profit (loss) for the period (211) 1,898 (111.1%)
Weighted average number of units outstanding (units) 119,635,429 119,635,429
Earnings per unit (EUR) (0.00) 0.02

Key financial position figures

EUR ‘000 30.09.2023 31.12.2022 Change (%)
Investment properties in use 256,662 333,123 (23.0%)
Gross asset value (GAV) 269,462 343,963 (21.7%)
Interest-bearing loans and bonds 144,006 194,569 (26.0%)
Total liabilities 151,478 210,308 (28.0%)
IFRS Net asset value (IFRS NAV) 117,984 133,655 (11.7%)
EPRA Net Reinstatement Value (EPRA NRV) 121,966 141,943 (14.1%)
Number of units outstanding (units) 119,635,429 119,635,429
IFRS Net asset value (IFRS NAV) per unit (EUR) 0.9862 1.1172 (11.7%)
EPRA Net Reinstatement Value (EPRA NRV) per unit (EUR) 1.0195 1.1865 (14.1%)
Loan-to-Value ratio (%) 56.10% 58.40%
Average effective interest rate (%) 5.10% 3.00%

During Q3 2023, the average actual occupancy of the portfolio was 79.5% (Q2 2023: 87.2%). The occupancy rate as of 30 September 2023 was 77.1% (30 June 2023: 84.6%). The overall occupancy rate was strongly influenced by the decreased occupancy in the office segment following the expiry of the lease with the anchor tenant SEB in Upmalas Biroji BC. The property management team has signed a new agreement with Latvian State Police in Upmalas Biroji BC to partially fill the space vacated by SEB in August 2023.

Sky SC and Vainodes I are now fully occupied. The Fund’s retail and office leasing teams were expanded in 2022 to speed up the leasing process. The agreement with the anchor tenant ARKET in Galerija Centrs was signed in December 2022. Construction works for ARKET fit-out started in Q1 2023, with an opening planned in December 2023.

Expiry of the agreement with the main tenant in Upmalas Biroji BC and EMERGN’s decision to reduce their rented area in LNK Centre had a negative impact on the property yields in Q3 2023. The average direct property yield during Q3 2023 was 4.3% (Q2 2023: 5.3%). The net initial yield for the whole portfolio for Q3 2023 was 5.0% (Q2 2023: 5.9%).

Overview of the Fund’s investment properties as of 30 September 2023

Property name Sector Fair value1 NLA Direct property yield Net initial yield Occupancy rate
(EUR ‘000) (sq. m)  Q3 20232 Q3 20233
Vilnius, Lithuania            
Europa SC Retail 35,828 17,051 3.7% 4.1% 84.2%
North Star Office 20,368 10,579 7.0% 7.3% 99.7%
Meraki Office 16,330 8,275 0.1% 0.1% 32.2%
Total Vilnius   72,526 35,905 3.6% 4.1% 76.8%
Riga, Latvia            
Upmalas Biroji BC Office 20,061 10,594 3.0% 3.6% 22.1%
Vainodes I Office 17,243 8,128 6.8% 8.6% 100.0%
LNK Centre Office 15,290 7,450 3.3% 3.7% 42.8%
Sky SC Retail 5,480 3,259 8.8% 8.2% 100.0%
Galerija Centrs Retail 67,504 19,294 3.6% 4.1% 80.4%
Total Riga   125,578 48,725 4.1% 4.8% 66.5%
Tallinn, Estonia            
Postimaja & CC Plaza complex Retail 23,100 9,232 3.7% 5.7% 95.6%
Postimaja & CC Plaza complex Leisure 12,432 9,139 6.2% 6.0% 94.3%
Lincona Office 14,201 10,775 6.9% 7.9% 85.8%
Pirita SC Retail 8,825 5,425 6.3% 8.9% 97.1%
Total Tallinn   58,558 34,571 5.2% 6.8% 92.4%
Total portfolio   256,662 119,201 4.3% 5.0% 77.1%
  1. Based on the latest valuation as of 30 September 2023, 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.


EUR ‘000 01.07.2023- 01.07.2022- 01.01.2023- 01.01.2022-
30.09.2023 30.09.2022 30.09.2023 30.09.2022
Rental income 3,893 5,352 13,988 15,422
Service charge income 1,334 1,362 4,521 4,007
Cost of rental activities (1,999) (2,416) (6,786) (6,456)
Net rental income 3,228 4,298 11,723 12,973
Administrative expenses (572) (752) (1,986) (2,137)
Other operating income 15 278
 Losses on disposal of investment properties (59)  – (3,810)  –
 Valuation gains (losses) on investment properties  (3) (14) (14,626)          158
Operating profit (loss) 2,594 3,532 (8,684) 11,272
Financial income 74 1 75 1
Financial expenses (2,891) (1,503) (7,316) (4,463)
Net financial expenses (2,817) (1,502) (7,241) (4,462)
Profit (loss) before tax (223) 2,030 (15,925) 6,810
Income tax charge 12 (132) 709 (673)
Profit (loss) for the period (211) 1,898 (15,216) 6,137
Other comprehensive income that is or may be reclassified to profit or loss in subsequent periods  
Net gain (loss) on cash flow hedges (341) 1,308 (514) 2,604
Income tax relating to net gain (loss) on cash flow hedges 32 (102) 59 (217)
Other comprehensive income (expense), net of tax, that is or may be reclassified to profit or loss in subsequent periods (309) 1,206 (455) 2,387
Total comprehensive income (expense) for the period, net of tax (520) 3,104 (15,671) 8,524
Basic and diluted earnings per unit (EUR) (0.00) 0.02 (0.13) 0.05


EUR ‘000   30.09.2023 31.12.2022
Non-current assets      
Investment properties   256,662 333,123
Intangible assets   6 6
Property, plant and equipment   5 1
Derivative financial instruments   747 2,228
Other non-current assets   260
Total non-current assets   257,680 335,358
Current assets      
Trade and other receivables   2,558 2,693
Prepayments   307 273
Derivative financial instruments   1,028 292
Cash and cash equivalents   7,889 5,347
Total current assets   11,782 8,605
Total assets   269,462 343,963
Paid in capital   145,200 145,200
Cash flow hedge reserve   1,226 1,681
Retained earnings   (28,442) (13,226)
Total equity   117,984 133,655
Non-current liabilities      
Interest-bearing loans and borrowings   74,809 124,017
Deferred tax liabilities   2,792 7,490
Other non-current liabilities   906 1,240
Total non-current liabilities   78,507 132,747
Current liabilities      
Interest-bearing loans and borrowings   69,457 71,094
Trade and other payables   2,855 5,644
Income tax payable   10
Other current liabilities   659 813
Total current liabilities   72,971 77,561
Total liabilities   151,478 210,308
Total equity and liabilities   269,462 343,963

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.

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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 21:50 EET on 7 November 2023.