Gross Asset Value (GAV) As at 31 December 2018, the GAV was EUR 260.9 million (EUR 248.6 million as at 30 September 2018). During Q4 2018, the Group completed subsequent subscription for its 5-year unsecured notes (bonds) worth EUR 10 million. Net Asset Value (NAV) In Q4 2018, the Fund NAV increased from EUR 109.3 million to EUR 109.8 million. Equity was positively affected by the Fund’s operational performance over the quarter, however, this was offset by a EUR 2.04 million cash distribution to its unitholders (EUR 0.026 per unit) and a buy-back of own units. 

Net Operating Income (NOI) and Net Profit In Q4 2018, the Fund NOI was EUR 3.9 million (EUR 2.9 million in Q4 2017), net profit was EUR 3.5 million (EUR 5.3 million in Q4 2017). Growth in NOI was positively affected by the new property acquisitions (Vainodes I office building, Postimaja shopping centre and LNK Centre). During the quarter, the Fund recorded a fair value gain of EUR 1.5 million whereas the fair value gain in Q4 2017 was EUR 3.3 million.

Cash Distributions (dividends) On 13 February 2019, the Fund declared a cash distribution of EUR 2,119 thousand (EUR 0.027 per unit) to the Fund unitholders for Q4 2018 results (EUR 2,044 thousand or EUR 0.026 per unit for Q3 2018). During Q4 2018, the Generated Net Cash Flow (GNCF) amounted to EUR 2,204 thousand or EUR 0.028 per unit (EUR 2,067 thousand or EUR 0.026 per unit for Q3 2018). Quarterly Key Figures

Euro ‘000 Q4 2018 Q4 2017 Change (%)
       
Net rental income 3,929 2,922 34.5%
Valuation gains / (loss) on investment properties 1,534 3,337 (54.0%)
Operating profit 4,685 5,357 (12.5%)
Net financing costs (806) (403) 100%
Profit before tax 3,879 4,954 (21.7%)
Net profit for the period 3,535 5,277 (33.0%)
       
Weighted average number of units outstanding 78,637,645* 69,011,121 13.9%
Earnings per unit (EUR) 0.04 0.08 (50%)
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 78,496,831* 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 purchased by the Fund as part of the units buy-back program. 

Investment properties PERFORMANCE in Q4 2018

During Q4 2018, the average actual occupancy of the portfolio was 98.2% (Q3 2018: 97.5%). When all rental guarantees are considered, the effective occupancy rate is 98.6% (Q3 2018: 97.8%). The average direct property yield during Q4 2018 was 6.8% (Q3 2018: 6.9%). The net initial yield for the whole portfolio for Q4 2018 was 6.5% (Q3 2018: 6.6%).

Property name City Country Book value 1 Euro‘000 NLA Direct property yield 2 Net initial yield 3 Occupancy rate for Q4 2018
Duetto I Vilnius Lithuania 16,320 8,498 6.7% 6.1% 100.0% 4
Pirita SC Tallinn Estonia 10,020 5,427 7.4% 9.0% 100.0% 4
Upmalas Biroji BC Riga Latvia 25,730 10,458 7.3% 6.7% 100.0%
G4S Headquarters Tallinn Estonia 17,240 9,179 7.7% 6.9% 100.0%
Europa SC Vilnius Lithuania 41,100 16,856 6.3% 5.7% 95.6%
Domus Pro Retail Park Vilnius Lithuania 17,460 11,247 7.2% 6.5% 98.4%
Domus Pro Office Vilnius Lithuania 7,460 4,831 8.2% 7.1% 98.4%
Meraki Vilnius Lithuania 1,670 -  - - -
Sky SC Riga Latvia 5,390 3,254 8.1% 7.5% 99.4%
Lincona Tallinn Estonia 17,170 10,870 8.1% 7.4% 98.5%
Vainodes I Riga Latvia 21,230 8,052 6.8% 6.8% 100.0%
Postimaja & CC Plaza complex Tallinn Estonia 46,920 17,809 5.9% 5.8% 97.9%
LNK Centre Riga Latvia 17,450 7,453 6.3% 6.3% 100.0%
Total portfolio     245,160 113,934 6.8% 6.5% 98.6%
  1. Based on the latest valuation as at 28 December 2018.
  2. Direct property yield (DPY) is calculated by dividing NOI by the acquisition value and subsequent capital expenditure of the property.
  3. The net initial yield (NIY) is calculated by dividing NOI by the market value of the property.
  4. Effective occupancy rate is 100% due to a rental guarantee.

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Euro ‘000 01.10.2018-31.12.2018 01.10.2017-31.12.2017 (restated)* 01.01.2018-31.12.2018 01.01.2017-31.12.2017 (restated)*
         
Rental income 4,284 3,217 15,860 11,839
Service charge income 948 756 2,760 1,921
Cost of rental activities (1,303) (1,051) (3,816) (2,992)
Net rental income 3,929 2,922 14,804 10,768
         
Administrative expenses (804) (839) (2,813) (2,774)
Other operating income / (expenses) 26 (63) 74 14
Valuation gains / (loss) on investment properties 1,534 3,337 2,014 3,676
Operating profit 4,685 5,357 14,079 11,684
         
Financial income 2 2 8 47
Financial expenses (808) (405) (2,789) (1,528)
Net financing costs (806) (403) (2,781) (1,481)
         
Profit before tax 3,879 4,954 11,298 10,203
Income tax charge (344) 323 (1,308) (759)
Profit for the period 3,535 5,277 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 (588) 147 (1,013) 273
Termination of interest rate swap agreement - - - 57
Recognition of initial interest rate cap costs - (43) (33) (43)
Income tax relating to net gains (losses) on cash flow hedges 55 (17) 97 (49)
Other comprehensive income/ (expense), net of tax, that is or may be reclassified to profit or loss in subsequent periods (533) 87 (949) 238
         
Total comprehensive income for the period, net of tax 3,002 5,364 9,041 9,682
         
Basic and diluted earnings per unit (Euro) 0.04 0.08  0.13 0.15

*In 2018, the Group adopted IFRS 15 Revenue from Contracts with Customers, effective 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. The impact is related to presentation changes in accordance with IFRS 15.

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 14:23 EET on 15 February 2019.

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