Management Board of Northern Horizon Capital AS has approved the audited financial results of Baltic Horizon Fund (the Fund) for the year 2018. The financial results remained unchanged compared to the preliminary disclosure on 15 February 2019.
Gross Asset Value (GAV)
In 2018, the GAV increased from EUR 215.8 million to EUR 260.9 million compared to the end of 2017. The increase is mainly related to new acquisitions during the year and the cash received from a subsequent bond issue in December. The Fund completed the acquisitions of the Postimaja Shopping Centre, LNK Centre and Meraki land plot and thus deployed most of the new capital raised in 2018.
Net Asset Value (NAV)
In 2018, the Fund NAV increased from EUR 107 million to EUR 109.8 million compared to the end of 2017. The increase is related to new equity raised and the Group’s operational performance over the year. The Fund raised EUR 2.4 million net equity during the February private placement and generated almost EUR 10.0 million in net profit. The Fund NAV increase was offset by a EUR 7.7 million dividend distribution to its unitholders and a EUR 0.9 million buy-back of own units.
Net Rental Income and Net Profit
In 2018, the net profit of the Group increased from EUR 9.4 million to EUR 10.0 million as compared to 2017. During the year, the Group recorded a EUR 2.0 million fair value gain (EUR 3.7 million during 2017).
Net rental income for 2018 rose 37.5% to EUR 14.8 million, as compared to EUR 10.8 million in 2017. The increase is related to new acquisitions (Vainodes I office building, Postimaja shopping centre and LNK Centre) that were made following the capital raisings at the end of 2017 and at the start of 2018 and bond subscriptions.
Annual Key Figures
| Euro ‘000 | 2018 | 2017 | Change (%) |
| Net rental income | 14,804 | 10,768 | 37.5% |
| Valuation gains/(loss) on investment properties | 2,014 | 3,676 | (45.2%) |
| Operating profit | 14,079 | 11,684 | 20.5% |
| Net financing costs | (2,781) | (1,481) | 87.8% |
| Profit before tax | 11,298 | 10,203 | 10.7% |
| Net profit for the period | 9,990 | 9,444 | 5.8% |
| Weighted average number of units outstanding | 78,764,8951 | 62,270,694 | 26.5% |
| Earnings per unit (EUR) | 0.13 | 0.15 | (13.3%) |
| Euro ‘000 | 31.12.2018 | 31.12.2017 | Change (%) |
| Investment property in use | 245,160 | 189,317 | 29.5% |
| Gross asset value (GAV) | 260,878 | 215,785 | 20.9% |
| Interest bearing loans | 140,507 | 98,087 | 43.2% |
| Total liabilities | 151,073 | 108,809 | 38.8% |
| Net asset value (NAV) | 109,805 | 106,976 | 2.6% |
| Number of units outstanding | 78,496,8311 | 77,440,638 | 1.4% |
| Net asset value (NAV) per unit (EUR) | 1.3988 | 1.3814 | 1.3% |
| Loan-to-Value ratio (LTV) | 57.3% | 51.8% | |
| Average effective interest rate | 2.4% | 1.7% |
- The number of units excludes 255,969 units acquired by the Fund as part of the unit buy-back program.
Investment Properties Performance
During 2018, the average actual occupancy of the portfolio was 97.6% (2017: 96.6%). When all rental guarantees are considered, the effective occupancy rate is 98.0% (2017: 97.8%). Average direct property yield during 2018 was 6.8% (2017: 7.2%). The net initial yield for the whole portfolio for 2018 was 6.5% (2017: 6.8%). The decrease is related to the acquisition of new properties with lower yields.
| Property name | City | Country | Market value1 Euro‘000 |
NLA | Direct property yield for 2018 | Net initial yield for 2018 | Occupancy rate for 2018 |
| Duetto I | Vilnius | Lithuania | 16,320 | 8,498 | 7.3% | 6.7% | 100.0%2 |
| Pirita SC | Tallinn | Estonia | 10,020 | 5,427 | 7.3% | 8.1% | 100.0%2 |
| Upmalas Biroji BC | Riga | Latvia | 25,730 | 10,458 | 7.2% | 7.0% | 100.0% |
| G4S Headquarters | Tallinn | Estonia | 17,240 | 9,179 | 7.7% | 7.1% | 100.0% |
| Europa SC | Vilnius | Lithuania | 41,100 | 16,856 | 6.3% | 5.8% | 94.8% |
| Domus Pro Retail Park | Vilnius | Lithuania | 17,460 | 11,247 | 7.4% | 6.7% | 98.4% |
| Domus Pro Office | Vilnius | Lithuania | 7,460 | 4,831 | 7.7% | 6.9% | 95.9% |
| Meraki Land | Vilnius | Lithuania | 1,670 | – | – | – | – |
| Sky SC | Riga | Latvia | 5,390 | 3,254 | 8.2% | 7.5% | 99.3% |
| Lincona | Tallinn | Estonia | 17,170 | 10,870 | 7.7% | 7.2% | 94.6%3 |
| Vainodes I | Riga | Latvia | 21,230 | 8,052 | 6.9% | 6.7% | 100.0% |
| Postimaja & CC Plaza complex | Tallinn | Estonia | 46,920 | 17,809 | 6.2% | 5.9% | 98.1% |
| LNK Centre | Riga | Latvia | 17,450 | 7,453 | 6.4% | 6.4% | 100.0% |
| Total portfolio | 245,160 | 113,934 | 6.8% | 6.5% | 98.0% |
- Based on the latest valuation as at 28 December 2018.
- Effective occupancy rate is 100% due to a rental guarantee.
- Lincona Office Complex was fully occupied at the end of December 2018.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
| Euro ‘000 | 2018 | 2017 (restated)* |
| Rental income | 15,860 | 11,839 |
| Service charge income | 2,760 | 1,921 |
| Cost of rental activities | (3,816) | (2,992) |
| Net rental income | 14,804 | 10,768 |
| Administrative expenses | (2,813) | (2,774) |
| Other operating income/(expenses) | 74 | 14 |
| Valuation gains/(loss) on investment properties | 2,014 | 3,676 |
| Operating profit | 14,079 | 11,684 |
| Financial income | 8 | 47 |
| Financial expenses | (2,789) | (1,528) |
| Net financing costs | (2,781) | (1,481) |
| Profit before tax | 11,298 | 10,203 |
| Income tax charge | (1,308) | (759) |
| Profit for the period | 9,990 | 9,444 |
| Other comprehensive income that is or may be reclassified to profit or loss in subsequent periods | ||
| Net gains (losses) on cash flow hedges | (1,013) | 273 |
| Termination of interest rate swap agreement reclassified to profit or loss | – | 57 |
| Recognition of initial interest rate cap costs | (33) | (43) |
| Income tax relating to net gains (losses) on cash flow hedges | 97 | (49) |
| Other comprehensive income/(expense), net of tax, that is or may be reclassified to profit or loss in subsequent periods | (949) | 238 |
| Total comprehensive income/(expense) for the period, net of tax | 9,041 | 9,682 |
| Basic and diluted earnings per unit (Euro) | 0.13 | 0.15 |
*In 2018, the Group adopted IFRS 15 Revenue from Contracts with Customers, effective from 1 January 2018. As a result, the comparative figures for “service charge income” and “cost of rental activities” were adjusted. The adjustment did not have an impact on the Group’s equity.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Euro ‘000 | 31.12.2018 | 31.12.2017 |
| Non-current assets | ||
| Investment properties | 245,160 | 189,317 |
| Derivative financial instruments | 9 | 89 |
| Other non-current assets | 596 | 146 |
| Total non-current assets | 245,765 | 189,552 |
| Current assets | ||
| Trade and other receivables | 2,734 | 1,568 |
| Prepayments | 154 | 108 |
| Cash and cash equivalents | 12,225 | 24,557 |
| Total current assets | 15,113 | 26,233 |
| Total assets | 260,878 | 215,785 |
| Equity | ||
| Paid in capital | 93,673 | 91,848 |
| Own units | (335) | – |
| Cash flow hedge reserve | (1,005) | (56) |
| Retained earnings | 17,472 | 15,184 |
| Total equity | 109,805 | 106,976 |
| Non-current liabilities | ||
| Interest bearing loans and borrowings | 140,401 | 96,497 |
| Deferred tax liabilities | 5,844 | 5,206 |
| Derivative financial instruments | 1,069 | 88 |
| Other non-current liabilities | 905 | 859 |
| Total non-current liabilities | 148,219 | 102,650 |
| Current liabilities | ||
| Interest bearing loans and borrowings | 106 | 1,590 |
| Trade and other payables | 2,397 | 4,202 |
| Income tax payable | – | 14 |
| Derivative financial instruments | – | 15 |
| Other current liabilities | 351 | 338 |
| Total current liabilities | 2,854 | 6,159 |
| Total liabilities | 151,073 | 108,809 |
| Total equity and liabilities | 260,878 | 215,785 |
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 19:50 EET on 15 March 2019.
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