Gross Asset Value (GAV)
In Q3 2019, the GAV increased slightly from EUR 344.9 million to EUR 345.3 million compared to the end of Q2 2019. The increase is mainly related to the increase in investment property book value due to capital expenditures and the increase in cash as a result of the newly acquired Galerija Centrs’s positive effect on the Fund’s cash flows over the quarter.
Net Asset Value (NAV)
In Q3 2019, the Fund NAV increased from EUR 131.1 million to EUR 135.2 million compared to the end of Q2 2019. The Fund NAV was positively affected by the Fund’s operational performance over the quarter and capital raising in the amount of EUR 4 million (net equity) through a private placement in July. However, this was offset by a EUR 2.6 million cash distribution to unitholders (EUR 0.026 per unit) and a negative cash flow hedge reserve movement during the quarter.
Net Rental Income and Net Profit
In Q3 2019, the Fund earned a net profit of EUR 3.1 million (EUR 2.2 million during Q3 2018). In Q3 2019, the Fund recorded a EUR 5.4 million net rental income (EUR 3.8 million in Q3 2018). Growth in net rental income and net profit was positively affected by new property acquisitions in 2019 (Duetto II office building and Galerija Centrs shopping centre).
Cash Distributions (dividends)
On 18 October 2019, the Fund declared a EUR 3.06 million quarterly cash distribution to investors, which represents a EUR 0.027 distribution per unit for the Q3 2019 results (EUR 2.62 million or EUR 0.026 per unit for Q2 2019).
Quarterly key figures
| Euro ‘000 | Q3 2019 | Q3 2018 | Change (%) |
| Net rental income | 5,412 | 3,840 | 40.9% |
| Operating profit | 4,550 | 3,095 | 47.0% |
| Net financing costs | (1,339) | (774) | 73.0% |
| Profit before tax | 3,211 | 2,321 | 38.3% |
| Net profit for the period | 3,059 | 2,195 | 39.4% |
| Weighted average number of units outstanding | 100,461,178 | 79,064,2931 | 27.1% |
| Earnings per unit (EUR) | 0.03 | 0.03 | – |
| Euro ‘000 | 30.09.2019 | 31.12.2018 | Change (%) |
| Investment property in use | 336,488 | 245,160 | 37.3% |
| Gross asset value (GAV) | 345,327 | 260,878 | 32.4% |
| Interest bearing loans | 196,947 | 140,507 | 40.2% |
| Total liabilities | 210,098 | 151,073 | 39.1% |
| Net asset value (NAV) | 135,229 | 109,805 | 23.2% |
| Number of units outstanding | 100,915,202 | 78,496,8312 | 28.6% |
| Net asset value (NAV) per unit (EUR) | 1.3400 | 1.3988 | (4.2%) |
| Loan-to-Value ratio (LTV) | 58.5% | 57.3% | – |
| Average effective interest rate | 2.6% | 2.4% | – |
- The number of units excludes 278,402 units purchased by the Fund and cancelled in October 2018 as part of the unit buy-back program.
- The number of units excludes 255,969 units acquired by the Fund and cancelled in February 2019 as part of the unit buy-back program.
Investment properties PERFORMANCE in Q3 2019
During Q3 2019, the average actual occupancy of the portfolio was 97.3% (Q2 2019: 95.4%). When all rental guarantees are considered, the effective occupancy rate is 97.7% (Q2 2019: 96.7%). The average direct property yield during Q3 2019 was 6.7% (Q2 2019: 6.8%). The net initial yield for the whole portfolio for Q3 2019 was 6.5% (Q2 2019: 6.5%).
Overview of the Fund’s investment properties as of 30.09.2019
| Property name | Sector | Book value1 Euro ‘000 |
NLA | Direct property yield2 | Net initial yield3 | Occupancy rate for Q3 2019 |
| Vilnius, Lithuania | ||||||
| Duetto I | Office | 16,020 | 8,498 | 7.7% | 7.2% | 98.7% |
| Duetto II | Office | 17,900 | 8,673 | 7.1% | 7.3% | 100.0%4 |
| Europa SC | Retail | 40,403 | 16,856 | 6.7% | 6.1% | 95.6% |
| Domus Pro Retail Park | Retail | 16,523 | 11,247 | 7.5% | 7.1% | 98.1% |
| Domus Pro Office | Office | 7,530 | 4,831 | 8.7% | 7.5% | 100.0% |
| Meraki Land | 1,700 | – | – | – | – | |
| Total Vilnius | 100,076 | 50,105 | 7.2% | 6.8% | 97.9% | |
| Riga, Latvia | ||||||
| Upmalas Biroji BC | Office | 25,220 | 10,458 | 6.9% | 6.5% | 100.0% |
| Vainodes I | Office | 21,497 | 8,052 | 6.9% | 6.9% | 100.0% |
| LNK Centre | Office | 16,830 | 7,453 | 6.4% | 6.5% | 100.0% |
| Sky SC | Retail | 5,424 | 3,254 | 7.9% | 7.4% | 99.4% |
| Galerija Centrs | Retail | 75,840 | 20,022 | 6.1% | 6.0% | 95.9% |
| Total Riga | 144,811 | 49,239 | 6.5% | 6.4% | 98.3% | |
| Tallinn, Estonia | ||||||
| Postimaja & CC Plaza | Retail | 32,140 | 9,145 | 4.2% | 4.5% | 90.8% |
| Postimaja & CC Plaza | Leisure | 14,980 | 8,664 | 9.0% | 7.1% | 100.0% |
| G4S Headquarters | Office | 17,133 | 9,179 | 7.7% | 7.0% | 100.0% |
| Lincona | Office | 17,513 | 10,871 | 8.0% | 7.2% | 99.4% |
| Pirita SC | Retail | 9,835 | 5,508 | 6.8% | 8.6% | 92.6% |
| Total Tallinn | 91,601 | 43,367 | 6.5% | 6.3% | 97.0% | |
| Total portfolio | 336,488 | 142,711 | 6.7% | 6.5% | 97.7% |
- Based on the latest valuation as at 30 June 2019 and subsequent capital expenditures.
- Direct property yield (DPY) is calculated by dividing NOI by the acquisition value and subsequent capital expenditure of the property.
- The net initial yield (NIY) is calculated by dividing NOI by the market value of the property.
- Duetto II effective occupancy rate is 100% due to a rental guarantee.
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
| Euro ‘000 | 01.07.2019-30.09.2019 | 01.07.2018-30.09.2018 | 01.01.2019-30.09.2019 | 01.01.2018-30.09.2018 |
| Rental income | 5,782 | 4,012 | 14,579 | 11,576 |
| Service charge income | 1,476 | 619 | 3,128 | 1,812 |
| Cost of rental activities | (1,846) | (791) | (4,123) | (2,513) |
| Net rental income | 5,412 | 3,840 | 13,584 | 10,875 |
| Administrative expenses | (879) | (748) | (2,405) | (2,009) |
| Other operating income | 17 | 3 | 23 | 48 |
| Valuation gains (losses) on investment properties | – | – | (2,439) | 480 |
| Operating profit | 4,550 | 3,095 | 8,763 | 9,394 |
| Financial income | 1 | 2 | 4 | 6 |
| Financial expenses | (1,340) | (776) | (3,316) | (1,981) |
| Net financing costs | (1,339) | (774) | (3,312) | (1,975) |
| Profit before tax | 3,211 | 2,321 | 5,451 | 7,419 |
| Income tax charge | (152) | (126) | (75) | (964) |
| Profit for the period | 3,059 | 2,195 | 5,376 | 6,455 |
| Other comprehensive income that is or may be reclassified to profit or loss in subsequent periods | ||||
| Net gains (losses) on cash flow hedges | (305) | 205 | (1,397) | (425) |
| Recognition of initial interest rate cap costs | – | – | – | (33) |
| Income tax relating to net gains (losses) on cash flow hedges | 17 | (37) | 92 | 42 |
| Other comprehensive income (expense), net of tax, that is or may be reclassified to profit or loss in subsequent periods | (288) | 168 | (1,305) | (416) |
| Total comprehensive income for the period, net of tax | 2,771 | 2,363 | 4,071 | 6,039 |
| Basic and diluted earnings per unit (Euro) | 0.03 | 0.03 | 0.06 | 0.08 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| Euro ‘000 | 30.09.2019 | 31.12.2018 |
| Non-current assets | ||
| Investment properties | 336,488 | 245,160 |
| Derivative financial instruments | 33 | 9 |
| Other non-current assets | 96 | 596 |
| Total non-current assets | 336,617 | 245,765 |
| Current assets | ||
| Trade and other receivables | 1,958 | 2,229 |
| Prepayments | 247 | 154 |
| Other current assets | 960 | 505 |
| Cash and cash equivalents | 5,545 | 12,225 |
| Total current assets | 8,710 | 15,113 |
| Total assets | 345,327 | 260,878 |
| Equity | ||
| Paid in capital | 121,883 | 93,673 |
| Own units | – | (335) |
| Cash flow hedge reserve | (2,310) | (1,005) |
| Retained earnings | 15,656 | 17,472 |
| Total equity | 135,229 | 109,805 |
| Non-current liabilities | ||
| Interest bearing loans and borrowings | 196,559 | 140,401 |
| Deferred tax liabilities | 5,809 | 5,844 |
| Derivative financial instruments | 2,491 | 1,069 |
| Other non-current liabilities | 1,248 | 905 |
| Total non-current liabilities | 206,107 | 148,219 |
| Current liabilities | ||
| Interest bearing loans and borrowings | 388 | 106 |
| Trade and other payables | 2,890 | 2,397 |
| Income tax payable | 1 | – |
| Other current liabilities | 712 | 351 |
| Total current liabilities | 3,991 | 2,854 |
| Total liabilities | 210,098 | 151,073 |
| Total equity and liabilities | 345,327 | 260,878 |
