BALTIC HORIZON FUND WEBINAR Interim Results H1 2020 Page 1 - PowerPoint PPT Presentation

BALTIC HORIZON FUND WEBINAR Interim Results H1 2020 Page 1

Europa SC Key highlights Page 2

DIVERSIFIED INVESTMENT STRATEGY Fund information  Focus on high-quality properties in the Baltic capitals Total >5,000 investors Units EUR >113 million  High dividend capacity outstanding Nasdaq churn ca 14% of the market cap  Active management and solid existing portfolio p.a Largest Swedish church pension investors fund; SEB Baltic pension  Efficient and investor-friendly structure funds; Muirfield Invest; ETON; EIKOS, Vienna Insurance Group  Diversified portfolio Net lettable 153,351 sq.m. area  Liquidity through the stock market listing LTV 59.5%, max LTV 65% Dividend EUR 4.9 million in H1 2020 payout 1 (4.6 million in H1 2019) S&P rating MM3 (BB/BB+) 1 EUR 1.8 million was kept in a reserve to be paid out later. Page 3

KEY FIGURES 31 December 2019 Variance 30 June 2020 356,575 (4.0%) 342,267 Portfolio value Portfolio value Portfolio value (EUR ‘000) (EUR ‘000) 57.3% 220bps 59.5% LTV LTV LTV 1.3451 (9.5%) 1.2169 IFRS NAV IFRS NAV IFRS NAV (EUR per unit) (EUR per unit) 1.4333 (9.0%) 1.3044 EPRA NAV EPRA NAV EPRA NAV (EUR per unit) (EUR per unit) Variance H1 2019 H1 2020 8,172 27.1% 10,390 Net rental income Net rental income Net rental income (EUR ‘000) (EUR ‘000) (50bps) 5.9% 6.4% Net initial yield Net initial yield Net initial yield Page 4

NOTABLE EVENTS DURING 2020 EUR 0.028 EUR 0.015 per unit per unit  On 19 February 2020, the Fund  On 14 May 2020, the Fund distributed EUR 3.18 million to distributed EUR 1.70 million to investors (EUR 0.028 per unit). investors (EUR 0.015 per unit). Distribution on Distribution on 19 February 14 May 2020  This equals approx. 2.16% of the  This equals approx. 1.12% of the 2020 Fund’s Q4 2019 weighted average Fund’s Q1 2020 weighted average net asset value. net asset value.  In July 2020, the bondholders of EUR 50 million 5-year unsecured Equity bonds adopted the decision by the S&P MM3 ratio bond way of written procedure to  On 27 July 2020, S&P Global Ratings affirmed Baltic Horizon temporarily reduce the equity rating covenant Fund “MM3” mid-market rating. ratio bond covenant to 25% or affirmed reduction greater (previously 35% or greater). to 25%  The indicative corresponding rating  The original equity ratio covenant for “MM3” on the global rating 27 July 2020 scale is “BB+/ BB”. of 35% or greater will be July 2020 automatically reinstated as of 1 August 2021.  No covenants breached during COVID-19 pandemic period. Page 5

LNK Centre COVID-19 impact Page 6

CHANGES IN THE OPERATING ENVIRONMENT (1/3) While the operating environment changed dramatically with the outbreak of the COVID-19 pandemic, Baltic countries managed to avoid the worst of the health care crisis Europe Estonia Latvia Lithuania Cases have been reported: Cases have been reported: Cases have been reported: Cases have been reported: 3,109,225 2,158/162 per 100k pop 1,293/67 per 100k pop 2,265/81 per 100k pop Deaths have been reported: Deaths have been reported: Deaths have been reported: Deaths have been reported: 207,871 63/4.77 per 100k pop 32/1.66 per 100k pop 81/2.90 per 100k pop Confirmed cases in the last 14 Confirmed cases in the last 14 Confirmed cases in the last 14 Confirmed cases in the last 14 days (29.07-11.08): days (29.07-11.08): days (29.07-11.08): days (29.07-11.08): 275,410 120 73 246 Number cases and deaths per 100,000 inhabitants Infected in the last 200 14- days, as at Significant divergences in the magnitude of the 07.08.2020 healthcare crisis across countries 150 Countries voluntarily shut down a large part of the • 100 economies. Pandemic has left almost no country in the world • 50 unaffected. 0 • The countries have suffered differently from the Deaths, since the pandemic. -50 end of 2019 • In the Baltics, the virus was quickly contained -100 the Baltic countries have managed to hold infection and • death rates much lower than in many other parts of -150 Europe. Hungary Finland Latvia Lichtenstein Italy Norway Slovakia Lithuania Slovenia Estonia Ireland Germany United Kingdom Denmark Cyprus Austria Poland France Switzerland Iceland Portugal Netherlands Czech Republic Sweden Malta Bulgaria Croatia Monaco San Marino Belgium Andorra Spain Romania Luxembourg Source: European Centre for Disease Prevention and Control (as at 11.08.2020), ecdc.europe.eu; John Hopkins University & Medicine; Republic of Estonia, Ministry of Foreign Affairs. Page 7

COVID-19 RISK MANAGEMENT Government support measures: January February March April May June July August In Estonia, government support for a single affected tenant is capped at 25% of monthly Lithuania rent provided that the landlord gives a rental discount of at least 25%, resulting in minimum savings of 50% to the tenant; In Lithuania, the government implemented Latvia compensation of 50% of the monthly rent if the landlord provides a rental discount of at least 30%, resulting in minimum savings to the tenant of 80%. Compensation is available for the lockdown period and 2 months after; Estonia No rent compensation mechanism for private businesses has yet been announced in Latvia. Pre-quarantine Quarantine Post-quarantine Risk management measures:  We have active communication channels with our tenants and property managers who on a regular basis inform us of the measures they are taking to ensure their business continuity.  We have agreed on regular updates on tenants‘ performance and any issues in relation to COVID-19;  We have approached the developers and construction companies to inform us promptly of any interruptions in the supply chain of materials or any other potential delays in development projects. None have been reported thus far;  There is a sufficient liquidity buffer in the form of the cash balance to meet financial obligations in case of worst case scenarios in 2020 including a second lockdown;  We are continuously performing stress testing of debt covenants to be able to take any necessary measures in due time;  The Management Company has initiated additional measures to protect the key staff of the Fund and ensure continuity: all employees are working remotely, all business travel is suspended, and the succession plan has been reviewed and updated. Page 8

IMPACT OF THE COVID-19 Rent collection Recoveries 98.5% 80.7% 2020: 99.4% 98.3% 97.7% 95.6% 94.8% 95.5% 92.9% Rent collection Q1 Recovered footfall in 2020 Lithuania (July) 81.6% 94.7% 85.4% Rent collection Q2 Recovered turnover in 2020 Europa SC (July) 73.4% 68.4% Recovered footfall in Recovered turnover in Estonia (July) Galerija Centrs (July) 69.1% 78.6% Recovered footfall in Recovered turnover in January February March 2020 April 2020 May 2020 June 2020 July 2020 Latvia (July) Postimaja (July) 2020 2020 Relief measures The Fund is implementing a number of relief initiatives focused on alleviating the financial hardship of the most vulnerable group of tenants, whose operations were most severely affected by the outbreak. The Fund has agreed to grant rent payment deferral for a period of 90 days and waive all penalties and interest arising from the rent deferral for the most affected tenants during April and May. The Fund assessed the impact of COVID-19 on each tenant's operating performance during the lockdown and granted discounts to the most affected tenants, while at the same time protecting the best interests of unitholders and other stakeholders. The Fund’s management team reviewed each rent discount request individually in order to find suitable solutions for all parties. Relief measures granted to tenants helped to improve collection rates during June/July and maintain trade receivables at healthy levels. Page 9

Vainodes I Financial results Page 10

FINANCIAL RESULTS FOR H1 2020 KEY FIGURES Investment portfolio value (EUR ‘000) Net rental income (EUR ‘000) IFRS NAV per unit (EUR) 10,390 EUR 1.2169 358,942 8,172 345,541 31.12.2019: EUR 1.3451 7,035 245,160 5,208 EPRA NAV per unit (EUR) 189,317 143,320 2,915 EUR 1.3044 31.12.2019: EUR 1.4333 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 H1 H1 H1 H1 H1 H1 Earnings per unit (EUR) LTV and average cost of debt (Loss) profit for the period (EUR ‘000) 2.60% 2.60% 4,260 2.40% EUR (0.08) 2,492 2,317 65.0% 2.70% 1.70% 872 1.80% 55.0% H1 2019: EUR 0.03 2.20% 45.0% 1.70% Gross dividend yield 1 35.0% 1.20% 25.0% 0.70% 48.8% 51.8% 57.3% 57.3% 59.5% 7.2% 15.0% (9,456) 0.20% 5.0% Q1 2020: 9.6% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 -5.0% -0.30% H1 H1 H1 H1 H1 H1 LTV Average cost of debt 1. Gross dividend yield is based on the closing market price of the unit as at the end of the year (Q2 2020: closing market price of the unit as of 30 June 2020). Page 11