During the 9 months of 2017, the net operating income earned by Baltic Horizon Fund (the Fund ) amounted to EUR 7.8 million (EUR 4.8 million during 9 months of 2016). During Q3 2017, the Fund recorded a net operating income of EUR 2.6 million (EUR 1.9 million during Q3 2016). The increase is related to new acquisitions that were made following the capital raisings at the end of 2016 and the beginning of 2017.
During Q3 2017, the Fund earned a net profit of EUR 1,675 thousand (EUR 3,708 thousand during Q3 2016). Last year during the same quarter, the Fund’s performance was affected by extraordinary investment property valuations, which had a significant impact on its quarterly net profit. During Q3 2017, the Fund did not perform any new investment property valuations as from 2017 onwards, valuation of properties will be performed in June and December.
As at end of Q3 2017, the GAV of the Fund decreased from EUR 170.9 million to 169.7 million compared to Q2 2017. A slight decrease in GAV was due to active capital management activities over the quarter. During Q3 2017, the Fund successfully refinanced Europa Shopping centre bank loan by repaying EUR 2.1 million and made a cash distribution of EUR 1.2 million to its unitholders.
As at 30 September 2017, the Fund NAV has increased from EUR 86.2 million to EUR 86.7 million, compared to the end of Q2 2017.
Quarterly Key Figures
| Euro ‘000 | Q3 2017 | Q3 2016 | Change (%) |
| Rental income | 2,955 | 2,058 | 43.6% |
| Service charge income | 820 | 617 | 32.9% |
| Cost of rental activities | (1,137) | (747) | 52.2% |
| Net rental income | 2,638 | 1,928 | 36.8% |
| Expenses related to public offerings | (61) | (125) | (51.2)% |
| Administrative expenses | (474) | (357) | 32.8% |
| Other operating income / (expenses) | 64 | 17 | >100.0% |
| Valuation gains / (loss) on investment properties | - | 2,802 | (>100.0)% |
| Operating profit | 2,167 | 4,265 | (49.2)% |
| Financial income | 2 | 3 | (33.3)% |
| Financial expenses | (348) | (307) | 13.4% |
| Net financing costs | (346) | (304) | 13.8% |
| Profit before tax | 1,821 | 3,961 | (54.0)% |
| Income tax charge | (146) | (253) | (42.3)% |
| Profit for the period | 1,675 | 3,708 | (54.8)% |
| Weighted average number of units outstanding | 60,006,856 | 39,163,520 | 53.2% |
| Earnings per unit (EUR) | 0.03 | 0.09 | (66.7)% |
| Euro ‘000 | 30.09.2017 | 31.12.2016 | Change (%) |
| Investment property in use | 157,822 | 141,740 | 11.3% |
| Gross asset value (GAV) | 169,738 | 154,938 | 9.6% |
| Interest bearing loans | 72,569 | 69,172 | 4.9% |
| Total liabilities | 83,085 | 78,129 | 6.3% |
| Net asset value (NAV) | 86,653 | 76,809 | 12.8% |
| Number of units outstanding | 64,655,870 | 57,264,743 | 12.9% |
| Net asset value (NAV) per unit (EUR) | 1.3402 | 1.3413 | (0.1)% |
| Loan-to-Value ratio (LTV) | 46.0% | 48.8% | |
| Average effective interest rate | 1.7% | 1.8% |
Investment properties PERFORMANCE as of 30 September 2017
During Q3 2017, the average actual occupancy of the portfolio increased from 95.4% in Q2 2017 to 97.5% in Q3 2017. When all rental guarantees are considered, the effective occupancy rate is 98.0% (98.1% during Q2 2017). Average direct property yield during Q3 was 7.2% (Q2 2017: 7.2%). The net initial yield for the whole portfolio for Q3 2017 was 6.9%.
| Property name | City | Country | Market value Euro‘000 | NLA | Direct property yield | Net initial yield | Occupancy rate for Q3 2017 |
| Duetto I | Vilnius | Lithuania | 14,890 | 8,327 | 7.2% | 7.1% | 100.0%* |
| Pirita SC | Tallinn | Estonia | 11,590 | 5,436 | 7.5% | 7.8% | 100.0%* |
| Upmalas Biroji BC | Riga | Latvia | 24,052 | 10,419 | 7.1% | 7.0% | 99.8% |
| G4S Headquarters | Tallinn | Estonia | 16,080 | 8,363 | 7.5% | 7.2% | 100.0% |
| Europa SC | Vilnius | Lithuania | 38,800 | 16,856 | 6.0% | 5.7% | 94.2% |
| Domus Pro Retail Park | Vilnius | Lithuania | 17,180 | 11,247 | 7.7% | 6.8% | 98.2% |
| CC Plaza | Tallinn | Estonia | 13,180 | 8,664 | 8.3% | 7.5% | 100.0% |
| Sky SC | Riga | Latvia | 5,582 | 3,263 | 8.4% | 7.2% | 98.2% |
| Lincona | Tallinn | Estonia | 15,920 | 10,859 | 7.4% | 7.1% | 96.6% |
| Total portfolio | 157,274 | 83,621 | 7.2% | 6.9% | 98.0% |
* Effective occupancy rate is 100% due to a rental guarantee provided by the seller.
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
| Euro ‘000 | 01.07.2017-30.09.2017 | 01.07.2016-30.09.2016 | 01.01.2017-30.09.2017 | 01.01.2016-30.09.2016 |
| Rental income | 2,955 | 2,058 | 8,622 | 5,334 |
| Service charge income | 820 | 617 | 2,663 | 1,810 |
| Cost of rental activities | (1,137) | (747) | (3,439) | (2,301) |
| Net rental income | 2,638 | 1,928 | 7,846 | 4,843 |
| Administrative expenses | (535) | (482) | (1,935) | (1,462) |
| Other operating income / (expenses) | 64 | 17 | 77 | 95 |
| Valuation gains / (loss) on investment properties | - | 2,802 | 339 | 2,361 |
| Operating profit | 2,167 | 4,265 | 6,327 | 5,837 |
| Financial income | 2 | 3 | 45 | 11 |
| Financial expenses | (348) | (307) | (1,123) | (840) |
| Net financing costs | (346) | (304) | (1,078) | (829) |
| Profit before tax | 1,821 | 3,961 | 5,249 | 5,008 |
| Income tax charge | (146) | (253) | (1,082) | (428) |
| Profit for the period | 1,675 | 3,708 | 4,167 | 4,580 |
| Other comprehensive income that is or may be reclassified to profit or loss in subsequent periods | ||||
| Net gains (losses) on cash flow hedges | (94) | (36) | 126 | (65) |
| Termination of interest rate swap agreement reclassified to profit or loss | - | - | 57 | - |
| Income tax relating to net gains (losses) on cash flow hedges | 8 | (7) | (32) | (1) |
| Other comprehensive income/ (expense), net of tax, that is or may be reclassified to profit or loss in subsequent periods | (86) | (43) | 151 | (66) |
| Total comprehensive income/ (expense) for the period, net of tax | 1,589 | 3,665 | 4,318 | 4,514 |
| Basic and diluted earnings per unit (Euro) | 0.03 | 0.09 | 0.07 | 0.12 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Euro ‘000 | 30.09.2017 | 31.12.2016 |
| Non-current assets | ||
| Investment properties | 157,822 | 141,740 |
| Investment property under construction | 5,725 | 1,580 |
| Derivative financial instruments | 9 | - |
| Other non-current assets | 72 | 288 |
| Total non-current assets | 163,628 | 143,608 |
| Current assets | ||
| Trade and other receivables | 1,569 | 1,269 |
| Prepayments | 135 | 178 |
| Cash and cash equivalents | 4,406 | 9,883 |
| Total current assets | 6,110 | 11,330 |
| Total assets | 169,738 | 154,938 |
| Equity | ||
| Paid in capital | 75,597 | 66,224 |
| Own units | - | (8) |
| Cash flow hedge reserve | (143) | (294) |
| Retained earnings | 11,199 | 10,887 |
| Total equity | 86,653 | 76,809 |
| Non-current liabilities | ||
| Interest bearing loans and borrowings | 63,601 | 58,981 |
| Deferred tax liabilities | 5,513 | 4,383 |
| Derivative financial instruments | 172 | 345 |
| Other non-current liabilities | 891 | 935 |
| Total non-current liabilities | 70,177 | 64,644 |
| Current liabilities | ||
| Interest bearing loans and borrowings | 8,968 | 10,191 |
| Trade and other payables | 3,496 | 2,876 |
| Income tax payable | 29 | 46 |
| Other current liabilities | 415 | 372 |
| Total current liabilities | 12,908 | 13,485 |
| Total liabilities | 83,085 | 78,129 |
| Total equity and liabilities | 169,738 | 154,938 |
Additional information:
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 an alternative investment fund manager license holder Northern Horizon Capital AS.
Distribution: Nasdaq, 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 7:00 EET on 22 November 2017.
