Management Board of Northern Horizon Capital AS has approved the audited financial results of Baltic Horizon Fund (the Fund) for the year 2017. The financial results remained unchanged compared to the preliminary disclosure on 15th of February 2018.
At the end of 2017, the GAV increased from EUR 154.9 million to EUR 215.8 million as compared to the end of 2016. The increase is mainly related to new acquisitions during the year and the increase in cash as a result of the latest secondary public offering in November. The Fund completed the acquisition of the Postimaja Shopping Centre on 13 February 2018 and thus has deployed most of the new capital raised in November 2017.
During 2017, the Fund NAV increased from EUR 76.8 million to EUR 107 million as compared to the end of 2016. The increase is related to new equity raised and the Group’s operational performance over the year. The Fund raised EUR 25.6 million net equity during the June and November public offerings and generated EUR 9.4 million in net profit. The Fund also made a EUR 5.1 million cash distribution to its investors.
In 2017, the net profit of the Group increased from EUR 5.8 million to EUR 9.4 million as compared to 2016. During the year, the Group recorded a EUR 3.7 million fair value gain (EUR 2.7 million during 2016).
In 2017, the Group recorded a EUR 10.8 million net rental income (EUR 7.2 million in 2016). The increase is related to new acquisitions that were made following the capital raisings at the end of 2016 and during 2017.
Annual Key Figures
| Euro ‘000 | 2017 | 2016 | Change (%) | |||
| Rental income | 11,839 | 7,874 | 50.4 | % | ||
| Service charge income | 3,692 | 2,594 | 42.3 | % | ||
| Cost of rental activities | (4,763 | ) | (3,315 | ) | 43.7 | % |
| Net rental income | 10,768 | 7,153 | 50.5 | % | ||
| Expenses related to public offerings | (637 | ) | (938 | ) | (32.1 | )% |
| Administrative expenses | (2,137 | ) | (1,252 | ) | 70.7 | % |
| Other operating income / (expenses) | 14 | 97 | (85.6 | )% | ||
| Valuation gain / (loss) on investment properties | 3,676 | 2,737 | 34.3 | % | ||
| Operating profit | 11,684 | 7,797 | 49.9 | % | ||
| Financial income | 47 | 14 | 235.7 | % | ||
| Financial expenses | (1,528 | ) | (1,253 | ) | 21.9 | % |
| Net financing costs | (1,481 | ) | (1,239 | ) | 19.5 | % |
| Profit before tax | 10,203 | 6,558 | 55.6 | % | ||
| Income tax charge | (759 | ) | (798 | ) | (4.9 | )% |
| Profit for the period | 9,444 | 5,760 | 64.0 | % | ||
| Weighted average number of units outstanding | 62,270,694 | 47,350,881 | 31.5 | % | ||
| Earnings per unit (EUR) | 0.08 | 0.02 | 300.0 | % | ||
| Weighted average number of units outstanding | 62,270,694 | 47,350,881 | 31.5 | % |
| Earnings per unit (EUR) | 0.15 | 0.12 | 25.0 | % |
| Euro ‘000 | 31.12.2017 | 31.12.2016 | Change (%) | |
| Investment property in use | 189,317 | 141,740 | 33.6 | % |
| Gross asset value (GAV) | 215,785 | 154,938 | 39.3 | % |
| Interest bearing loans | 98,087 | 69,172 | 41.8 | % |
| Total liabilities | 108,809 | 78,129 | 39.3 | % |
| Net asset value (NAV) | 106,976 | 76,809 | 39.3 | % |
| Number of units outstanding | 77,440,638 | 57,264,743 | 35.2 | % | ||
| Net asset value (NAV) per unit (EUR) | 1.3814 | 1.3413 | 3.0 | % | ||
| Loan-to-Value ratio (LTV) | 51.8 | % | 48.8 | % | ||
| Average effective interest rate | 1.7 | % | 1.8 | % | ||
investment properties PERFORMANCE as of 31 DECEMBER 2017
During 2017, the average actual occupancy of the portfolio was 96.6% (2016: 97.1%). When all rental guarantees are considered, the effective occupancy rate is 97.8% (2016: 97.1%). Average direct property yield during 2017 was 7.2% (2016: 7.2%). The net initial yield for the whole portfolio for 2017 was 6.8% (2016: 6.8%).
| Property name | City | Country | Market value1 Euro‘000 | NLA | Direct property yield for 2017 | Net initial yield for 2017 | Occupancy rate for2017 | |||
| Duetto I | Vilnius | Lithuania | 16,210 | 8,327 | 6.5 | % | 6.4 | % | 100.0%2 | |
| Pirita SC | Tallinn | Estonia | 11,630 | 5,436 | 7.5 | % | 7.6 | % | 100.0%2 | |
| Upmalas Biroji BC | Riga | Latvia | 24,269 | 10,419 | 7.2 | % | 6.7 | % | 99.8 | % |
| G4S Headquarters | Tallinn | Estonia | 16,570 | 8,363 | 7.4 | % | 7.0 | % | 100.0 | % |
| Europa SC | Vilnius | Lithuania | 39,600 | 16,856 | 6.5 | % | 6.5 | % | 95.5 | % |
| Domus Pro Retail Park | Vilnius | Lithuania | 17,280 | 11,247 | 7.8 | % | 6.9 | % | 98.0 | % |
| Domus Pro Office | Vilnius | Lithuania | 7,150 | 4,759 | 3.9%3 | 2.8 | % | 73.4 | % | |
| CC Plaza | Tallinn | Estonia | 13,240 | 8,664 | 8.2 | % | 7.5 | % | 100.0 | % |
| Sky SC | Riga | Latvia | 5,448 | 3,263 | 8.6 | % | 7.5 | % | 99.3 | % |
| Lincona | Tallinn | Estonia | 16,050 | 10,859 | 7.7 | % | 7.4 | % | 94.1 | % |
| Vainodes I | Riga | Latvia | 21,870 | 8,052 | 4.3%4 | 4.2 | % | 100.0 | % | |
| Total portfolio | 189,317 | 96,245 | 7.2 | % | 6.8 | % | 97.2 | % | ||
- Based on the latest valuation as at 31 December 2017.
- Effective occupancy rate is 100% due to a rental guarantee.
- Domus Pro stage III was opened in October, however, it was not fully occupied during Q4 2017. It is expected to be fully occupied by the end of Q1 2018. The property development yield and annualized direct property yield is 7.9%.
- Vainodes I acquisition was closed on 12 December 2017. The annualized direct property yield is 7.0%.
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
| Euro ‘000 | 2017 | 2016 | ||
| Rental income | 11,839 | 7,874 | ||
| Service charge income | 3,692 | 2,594 | ||
| Cost of rental activities | (4,763 | ) | (3,315 | ) |
| Net rental income | 10,768 | 7,153 | ||
| Administrative expenses | (2,774 | ) | (2,190 | ) |
| Other operating income / (expenses) | 14 | 97 | ||
| Valuation gains / (loss) on investment properties | 3,676 | 2,737 | ||
| Operating profit | 11,684 | 7,797 | ||
| Financial income | 47 | 14 | ||
| Financial expenses | (1,528 | ) | (1,253 | ) |
| Net financing costs | (1,481 | ) | (1,239 | ) |
| Profit before tax | 10,203 | 6,558 | ||
| Income tax charge | (759 | ) | (798 | ) |
| Profit for the period | 9,444 | 5,760 | ||
| Other comprehensive income that is or may be reclassified to profit or loss in subsequent periods | ||||
| Net gains (losses) on cash flow hedges | 273 | (113 | ) | |
| Termination of interest rate swap agreement reclassified to profit or loss | 57 | - | ||
| Recognition of initial interest rate cap costs | (43 | ) | - | |
| Income tax relating to net gains (losses) on cash flow hedges | (49 | ) | 18 | |
| Other comprehensive income/ (expense), net of tax, that is or may be reclassified to profit or loss in subsequent periods | 238 | (95 | ) | |
| Total comprehensive income/ (expense) for the period, net of tax | 9,682 | 5,665 | ||
| Basic and diluted earnings per unit (Euro) | 0.15 | 0.12 | ||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Euro ‘000 | 31.12.2017 | 31.12.2016 | ||
| Non-current assets | ||||
| Investment properties | 189,317 | 141,740 | ||
| Investment property under construction | - | 1,580 | ||
| Derivative financial instruments | 89 | - | ||
| Other non-current assets | 146 | 288 | ||
| Total non-current assets | 189,552 | 143,608 | ||
| Current assets | ||||
| Trade and other receivables | 1,568 | 1,269 | ||
| Prepayments | 108 | 178 | ||
| Cash and cash equivalents | 24,557 | 9,883 | ||
| Total current assets | 26,233 | 11,330 | ||
| Total assets | 215,785 | 154,938 | ||
| Equity | ||||
| Paid in capital | 91,848 | 66,224 | ||
| Own units | - | (8 | ) | |
| Cash flow hedge reserve | (56 | ) | (294 | ) |
| Retained earnings | 15,184 | 10,887 | ||
| Total equity | 106,976 | 76,809 | ||
| Non-current liabilities | ||||
| Interest bearing loans and borrowings | 96,497 | 58,981 | ||
| Deferred tax liabilities | 5,206 | 4,383 | ||
| Derivative financial instruments | 88 | 345 | ||
| Other non-current liabilities | 859 | 935 | ||
| Total non-current liabilities | 102,650 | 64,644 | ||
| Current liabilities | ||||
| Interest bearing loans and borrowings | 1,590 | 10,191 | ||
| Trade and other payables | 4,202 | 2,876 | ||
| Income tax payable | 14 | 46 | ||
| Derivative financial instruments | 15 | - | ||
| Other current liabilities | 338 | 372 | ||
| Total current liabilities | 6,159 | 13,485 | ||
| Total liabilities | 108,809 | 78,129 | ||
| Total equity and liabilities | 215,785 | 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 18:00 EET on 16 March 2018.
