Management Board of Northern Horizon Capital AS has authorized the unaudited consolidated interim monetary statements of Baltic Horizon Fund (the Fund) for the primary 9 months of 2023.
Leasing exercise
Throughout Q1-Q3 2023, the Fund secured lease extensions with anchor tenants in retail belongings. Notably, the anchor grocery tenant Rimi prolonged its leases on the identical beneficial phrases in each Postimaja and Galerija Centrs. The H&M retailer will likely be upgraded in Postimaja to incorporate the H&M Home idea in November 2023, whereas ARKET will open in Galerija Centrs in December 2023.
Meanwhile, Europa SC demonstrated a surge in letting exercise throughout Q1-Q3 2023, with the Fund efficiently securing offers for a complete of two,941 sq. m with 13 tenants, together with outstanding names like Pi Pilates, Optometrijos Centras, Codekus and others. In addition, the Fund just lately finalized a brand new lease settlement with a outstanding anchor tenant IKI at Europa SC, signing a ten-year lease for an approximate whole lettable space of 1,900 sq. m. The opening of the brand new anchor tenant’s retailer, which will likely be on the coronary heart of the upgraded idea of the procuring centre, is anticipated to take place early subsequent 12 months.
In response to evolving market dynamics, the Fund is actively engaged in reletting efforts for present workplace vacancies and forthcoming workplace areas, significantly in gentle of EMERGN’s choice to scale back their rented space 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 roughly 4,060 sq. m for 12 years in Upmalas Biroji to partially offset the emptiness from SEB premises. The settlement with the Latvian State Police was signed in November and the transfer is anticipated early subsequent 12 months. The occupancy fee of Upmalas Biroji wil improve to 60% following the takeover of those premises. Additionally, intense negotiations are underway to make sure most occupancy within the Lincona building with a newly signed take care of Pet24 to open a pet retailer on the bottom flooring.
Outlook
An necessary milestone in our monetary journey was the refinancing of our EUR 50 million bond challenge in Q2 2023. We initiated a brand new bond challenge, elevating EUR 42 million to optimize our capital construction. 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 primary tranche in August 2023. The Fund’s administration group stays resolute in lowering monetary leverage on the earliest viable alternative.
Our administration group stays dedicated to exploring further divestment and refinancing alternatives aimed toward repaying the excellent EUR 12.5 million of the primary tranche earlier than its maturity date. As a part of this dedication, we’re actively engaged in negotiations with a number of monetary establishments to safe further funds and negotiating potential asset disposals, which might probably facilitate the redemption of bonds.
Looking forward, the Fund is decided to execute a number of early redemptions of bonds on the finish of 2023/in early 2024. These actions are aligned with our overarching technique to progressively scale back leverage ranges, with the ultimate objective of reaching a leverage ratio of roughly 50% following all deliberate refinancing actions within the upcoming 12 months.
Net end result and internet rental earnings
The Group recorded a internet lack of EUR 15.2 million for Q1-Q3 2023 towards a internet revenue of EUR 6.2 million for the corresponding interval in 2022. The internet end result was strongly impacted by the detrimental valuation results of EUR 14.6 million. Meanwhile in Q1-Q3 2022, the valuation resulted in a internet truthful worth achieve of EUR 0.2 million. The sale of the shares in BH Domus Pro UAB which owns a retail park and an workplace building and BH Duetto UAB, which owns two workplace buildings, resulted within the loss on disposal of EUR 3.8 million. The internet end result was additionally impacted by the upper monetary bills. Earnings per unit for Q1-Q3 2023 have been detrimental at EUR -0.13 (Q1-Q3 2022: constructive at EUR 0.05).
The Group earned internet rental earnings of EUR 11.7 million in Q1-Q3 2023 (Q1-Q3 2022: EUR 13.0 million). The outcomes for 2023 embody two months’ internet rental earnings of the Domus Pro Retail and Office property (EUR 0.3 million) and 5 months’ internet rental earnings of the Duetto properties (EUR 1.2 million), which have been bought in February and May 2023, respectively. Rent indexations and the restoration of earnings improved the web rental earnings of the identical portfolio combine (like-for-like portfolio).
On an EPRA like-for-like foundation, portfolio internet rental earnings elevated by 4.9% 12 months on 12 months, primarily as a result of restoration within the retail section.
BREEAM In-Use certificates
Baltic Horizon Fund has obtained BREEAM In-Use certificates for its Estonian retail belongings: Postimaja, CC Plaza and Pirita – have all achieved BREEAM In-Use certification with a ‘Good’ ranking. The BREEAM In-Use certificates is among the most necessary devices for assessing sustainable industrial development in Europe. It has been a key ESG precedence for the Fund to certify its properties with the internationally acknowledged BREEAM requirements. In 2021, the portfolio of workplace buildings obtained BREEAM certification, and in 2022, a costed retail portfolio certification plan was carried out with the objective to have a 100% licensed portfolio by the tip of 2023.
GRESB benchmarking
In Q3 2023, Baltic Horizon maintained the GRESB 4 star ranking for the second 12 months in a row. In the evaluation, the fund achieved a complete rating of 82 out of 100, representing the third highest GRESB rating within the ‘Northern Europe | Diversified – Office/Retail | Listed’ peer group. The GRESB Real Estate Assessment is an investor-driven world ESG benchmark and reporting framework for listed property firms, personal property funds, builders and buyers that make investments straight in actual property. The achievement of GRESB scores confirms the Fund’s steady efforts within the ESG discipline.
Gross Asset Value (GAV)
At the tip of Q3 2023, the Fund’s GAV was EUR 269.5 million (31 December 2022: EUR 344.0 million), 21.7% decrease than on the finish of the earlier interval. The lower is principally associated to the sale of the shares in BH Domus Pro UAB and BH Duetto UAB.
Net Asset Value (NAV)
At the tip 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 improve in operational efficiency 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 influence of valuations, the NAV on the finish 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), whereas EPRA internet tangible belongings and EPRA internet reinstatement worth have been EUR 1.0195 per unit (31 December 2022: EUR 1.1865). EPRA internet disposal worth was EUR 0.9827 per unit (31 December 2022: EUR 1.1143).
Investment properties
At the tip of Q3 2023, the Baltic Horizon Fund portfolio consisted of 12 money circulation producing funding properties within the Baltic capitals. The truthful worth of the Fund’s portfolio was EUR 256.7 million (31 December 2022: EUR 333.1 million) and integrated a complete internet leasable space of 119.2 thousand sq. m. During Q1-Q3 2023 the Group bought the Domus PRO buildings for roughly EUR 23.5 million and the Duetto I and Duetto II buildings for roughly EUR 37 million, invested EUR 1.2 million in reconstruction initiatives and EUR 1.2 million within the current property portfolio.
Interest-bearing loans and bonds
As of 30 September 2023 interest-bearing loans and bonds (excluding lease liabilities) have been EUR 144.0 million (31 December 2022: EUR 194.6 million). Outstanding financial institution loans decreased as a result of reimbursement of the Domus Pro and Duetto loans, a part of Europa and Kontor loans and common financial institution mortgage amortisation. Also, the Fund redeemed part of the bonds within the quantity of EUR 7.5 million on 1 August 2023. The redemption was accompanied by the discount of the nominal worth of the bonds to EUR 82,142.85 per bond. The whole nominal quantity of the bonds earlier than the redemption was EUR 42,000,000 and after the redemption is EUR 34,499,997. Annual mortgage amortisation accounted for 1.4% of whole debt excellent.
Cash circulation
Cash influx from core working actions in Q1-Q3 2023 amounted to EUR 8.7 million (Q1-Q3 2022: money influx of EUR 10.8 million). Cash influx from investing actions was EUR 21.4 million (Q1-Q3 2022: money outflow of EUR 11.1 million) as a result of sale of the shares in BH Domus Pro UAB and BH Duetto UAB. Cash outflow from financing actions was EUR 27.5 million (Q1-Q3 2022: money outflow of EUR 10.9 million). In Q1-Q3 2023, the Fund redeemed and issued bonds, repaid the Domus Pro and a part of the Europa mortgage, and paid common curiosity on financial institution loans and bonds. In March 2023 the Fund repaid the Domus Pro mortgage (EUR 11.0 million) and EUR 6.0 million of the Europa mortgage utilizing 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 challenge, accomplished a non-public placement of 5-year bonds and issued bonds within the whole quantity of EUR 42 million. In August the Fund early redeemed part of the bonds within the quantity of EUR 7.5 million. During August, the Fund efficiently refinanced the Kontor SIA mortgage till 2028, lowering the unique Kontor SIA mortgage by EUR 1.2 million. At the tip of Q3 2023, the Fund’s consolidated money and money equivalents amounted to EUR 7.9 million (31 December 2022: EUR 5.3 million). Operating prices are absolutely lined by money flows generated by rental actions.
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 workplace leasing groups have been expanded in 2022 to hurry up the leasing course of. The settlement with the anchor tenant ARKET in Galerija Centrs was signed in December 2022. Construction works for ARKET fit-out began in Q1 2023, with a gap deliberate in December 2023.
Expiry of the settlement with the principle tenant in Upmalas Biroji BC and EMERGN’s choice to scale back their rented space in LNK Centre had a detrimental influence on the property yields in Q3 2023. The common direct property yield throughout Q3 2023 was 4.3% (Q2 2023: 5.3%). The internet preliminary yield for the entire portfolio for Q3 2023 was 5.0% (Q2 2023: 5.9%).
Overview of the Fund’s funding properties as of 30 September 2023
| Property identify | Sector | Fair worth1 | NLA | Direct property yield | Net preliminary yield | Occupancy fee |
| (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 complicated | Retail | 23,100 | 9,232 | 3.7% | 5.7% | 95.6% |
| Postimaja & CC Plaza complicated | 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% |
- Based on the latest valuation as of 30 September 2023, subsequent capital expenditure and recognised right-of-use belongings,
- Direct property yield (DPY) is calculated by dividing annualized NOI by the acquisition worth and subsequent capital expenditure of the property.
- The internet preliminary yield (NIY) is calculated by dividing annualized NOI by the market worth of the property.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
| 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 earnings | 3,893 | 5,352 | 13,988 | 15,422 | ||
| Service cost earnings | 1,334 | 1,362 | 4,521 | 4,007 | ||
| Cost of rental actions | (1,999) | (2,416) | (6,786) | (6,456) | ||
| Net rental earnings | 3,228 | 4,298 | 11,723 | 12,973 | ||
| Administrative bills | (572) | (752) | (1,986) | (2,137) | ||
| Other working earnings | – | – | 15 | 278 | ||
| Losses on disposal of funding properties | (59) | – | (3,810) | – | ||
| Valuation beneficial properties (losses) on funding properties | (3) | (14) | (14,626) | 158 | ||
| Operating revenue (loss) | 2,594 | 3,532 | (8,684) | 11,272 | ||
| Financial earnings | 74 | 1 | 75 | 1 | ||
| Financial bills | (2,891) | (1,503) | (7,316) | (4,463) | ||
| Net monetary bills | (2,817) | (1,502) | (7,241) | (4,462) | ||
| Profit (loss) earlier than tax | (223) | 2,030 | (15,925) | 6,810 | ||
| Income tax cost | 12 | (132) | 709 | (673) | ||
| Profit (loss) for the interval | (211) | 1,898 | (15,216) | 6,137 | ||
| Other complete earnings that’s or could also be reclassified to revenue or loss in subsequent intervals | ||||||
| Net achieve (loss) on money circulation hedges | (341) | 1,308 | (514) | 2,604 | ||
| Income tax regarding internet achieve (loss) on money circulation hedges | 32 | (102) | 59 | (217) | ||
| Other complete earnings (expense), internet of tax, that’s or could also be reclassified to revenue or loss in subsequent intervals | (309) | 1,206 | (455) | 2,387 | ||
| Total complete earnings (expense) for the interval, internet of tax | (520) | 3,104 | (15,671) | 8,524 | ||
| Basic and diluted earnings per unit (EUR) | (0.00) | 0.02 | (0.13) | 0.05 | ||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| EUR ‘000 | 30.09.2023 | 31.12.2022 | |
| Non-current belongings | |||
| Investment properties | 256,662 | 333,123 | |
| Intangible belongings | 6 | 6 | |
| Property, plant and tools | 5 | 1 | |
| Derivative monetary devices | 747 | 2,228 | |
| Other non-current belongings | 260 | – | |
| Total non-current belongings | 257,680 | 335,358 | |
| Current belongings | |||
| Trade and different receivables | 2,558 | 2,693 | |
| Prepayments | 307 | 273 | |
| Derivative monetary devices | 1,028 | 292 | |
| Cash and money equivalents | 7,889 | 5,347 | |
| Total present belongings | 11,782 | 8,605 | |
| Total belongings | 269,462 | 343,963 | |
| Equity | |||
| Paid in capital | 145,200 | 145,200 | |
| Cash circulation hedge reserve | 1,226 | 1,681 | |
| Retained earnings | (28,442) | (13,226) | |
| Total fairness | 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 different payables | 2,855 | 5,644 | |
| Income tax payable | – | 10 | |
| Other present liabilities | 659 | 813 | |
| Total present liabilities | 72,971 | 77,561 | |
| Total liabilities | 151,478 | 210,308 | |
| Total fairness and liabilities | 269,462 | 343,963 |
For extra data, please contact:
Tarmo Karotam
Baltic Horizon Fund supervisor
E-mail [email protected]
www.baltichorizon.com
The Fund is a registered contractual public closed-end actual property fund that’s 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.
Distribution: Nasdaq, GlobeNewswire, www.baltichorizon.com
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This announcement incorporates data that the Management Company is obliged to reveal pursuant to the EU Market Abuse Regulation. The data was submitted for publication, by means of the company of the above distributors, at 21:50 EET on 7 November 2023.
