Quarterly report - Q3 2024
Baltic Sea Properties AS | Quarterly report | Q3 2024 |
About us
Baltic Sea Properties is a Norwegian public listed, open-ended and fully integrated investment company. The company is among the Baltics' leading real estate investors and developers
- owning a diversified cash flow generating portfolio of modern real estate in the logistics, industrial and commercial segments.
Our strategy is to develop long-term relationships with strong clients and to hold high-quality assets in attractive locations. We grow our portfolio by own developments and acquisitions with the objective to maximise shareholder values and the company's dividend capacity.
The property management is conducted through fully-owned subsidiaries by a professional management team with deep knowledge of the Baltic real estate market
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Baltic Sea Properties AS | Quarterly report | Q3 2024 |
Contents
About us | 2 |
Our Vision, Mission & Values | 4 |
Highlights | 6 |
Financial Overview | 8 |
Key figures group | 9 |
Financial results | 10 |
Income From Property Management (IFPM) | 11 |
Financing | 12 |
Financial expenses overview | 13 |
Loan-to-Value (LTV) | 14 |
Net Asset Value (NAV) | 15 |
Consolidated statements | 16 |
Market update from Newsec Baltics | 22 |
Property portfolio | 24 |
Client mix | 25 |
Investment strategy | 26 |
Our development approach | 27 |
Sustainability in development | 28 |
BREEAM certification status | 29 |
Investment projects | 30 |
Development projects | 39 |
Available land | 40 |
Contact | 42 |
Euronext Growth Oslo | 44 |
Appendix 1 - Reconciliation of APM's | 45 |
Disclaimer:
This report has been prepared by Baltic Sea Properties AS in good faith and to our best ability with the purpose to give the company's shareholders updated information about the company's operations and status. This document must not be understood as an offer or encouragement to invest in the company. The financial figures presented are unadited and may thus include discrepancies. Baltic Sea Properties AS further makes reservations that errors may have occurred in its calculations of key figures or in the development of the report which may contribute to an inaccurate impression of the company's status and/or operations. The report also includes descriptions and comments which are based on subjective assumptions and considerations, and thus must not be understood as a guarantee of future events or future profits.
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Our Vision
Our vision is to be the preferred real estate partner and leading investment company in the region.
We will achieve this by staying true to our mission and values.
Our Mission
Our mission is to foster a great team, to provide high quality and sustainable solutions for our partners, thus creating superior long-term value and returns for our shareholders.
Our Values
- Commitment to our people and their professional development.
- Focusing on innovation and value creation.
- Respect for our social and physical environment.
- Accountability and fairness with our stakeholders.
Baltic Sea Properties AS | Quarterly report | Q3 2024 |
Highlights
Quarterly report Q3 2024 (unaudited)
Resilient Progress
We are pleased to present our third-quarter report, highlighting another period of strong performance and robust cash flow growth, achieved despite a complex and evolving economic environment.
In Lithuania, the economic outlook remains optimistic. The European Commission forecasts GDP growth of 2% in 2024, driven by strong private consumption and sustained investment. This resilience underscores the strength of the Lithuanian market, even amidst external challenges.
In navigating uncertainties, BSP remains committed to a disciplined growth strategy, supported by a substantial investment pipeline that aligns with our ambitious growth objectives. Our focus on sustainable real estate development, supported by a solid capital structure, continues to strengthen our position in the sector.
Furthermore, we believe the attractive yield spread relative to the Nordics will sustain both robust cash yields and strong value growth potential, reinforcing BSP's long-term value proposition.
Key metrics and highlights - Q3 2024
- Rental income of mEUR 6.22 (mEUR 5.98)
- EBITDA of mEUR 4.58 (mEUR 4.52)
- IFPM of mEUR 1.79 (mEUR 2.40)
- Profit after tax of mEUR 2.40 (mEUR 1.49)
- Net Asset Value of mEUR 50.72 (mEUR 40.00)
- Valuation of investment properties of mEUR 105.85 (mEUR 98.59)
- Loan to Value (LTV) of 52.90% (59.50%)
- Net LTV (adjusted for cash) of 49.63 % (57.18%)
- ICR Group of 1.74 (2.23)
- The development project for ESO (Ignitis) of 4,340 m2 in Liepų Parkas proceeds according to budget and on schedule with planned handover to ESO in January 2025.
- During the summer of 2024, we successfully raised mNOK 98.4 (mNOK 87.3 from direct placement + mNOK 11.1 from subsequent repair issue) at NOK 49 pr share.
- Distribution of NOK 1.75 per share in dividend to shareholders in June.
- Once again, we were awarded 1st place in the category "Strongest Brand Baltics Developers logistics" during the European Real Estate Brand Awards (June 2024). BSP has now won this category for four consecutive years.
- We continue to work hard on building a strong development pipeline, including several exciting prospects within our new business and retail park, Liepų Parkas.
Small frame | Construction in progress, November 2024
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Large frame | Concept visualisation of Liepų Parkas (retail and business park, Liepų Street, Klaipėda)
Baltic Sea Properties AS | Quarterly report | Q3 2024 |
Financial overview
Q3 2024
- Key figures group
- Financial results
- Income From Property Management (IFPM)
- Financing
- Financial expenses overview
- Loan-to-Value(LTV)
- Net Asset Value (NAV)
- Consolidated statements
Please note:
Unless stated otherwise, the financial figures presented in this chapter have been prepared using the same IFRS principles as described in the company's Annual Report 2022 (available for download on balticsea.no). The consolidated statements presented in this quarterly report are however simplified
from the IFRS requirements.
Please note that the quarterly/half-yearly figures in this report are unaudited.
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Baltic Sea Properties AS | Quarterly report | Q3 2024 |
Key figures group
Quarterly report Q3 2024 (unaudited)
Per share | 30/09/2024 | 31/12/2023 | 30/09/2023 | |
Net Asset Value (NAV) in NOK | 68.69 | * | 68.95 | 67.41 |
NAV in EUR | 5.84 | * | 6.13 | 5.99 |
YTD Return NAV incl. dividend (NOK)* | 10.76% | 13.56% | 10.55 % | |
YTD Return NAV incl. dividend (EUR) * | 5.54% | 6.39% | 3.85% | |
Dividend distributed (NOK) | 1.75 | 1.60 | 1.60 | |
Dividend distributed (EUR) | 0.15 | 0.14 | 0.15 | |
Last transaction price per date (NOK) | 49.00 | 47.40 | 47.00 | |
Number of shares issued | 8 696 077 | * | 6 688 232 | 6 688 232 |
EURNOK rate, balance sheet date 1 | 11.76 | 11.24 | 11.25 | |
EURNOK rate, YTD average 2 | 11.58 | 11.42 | 11.35 | |
- EURNOK rate per balance sheet date is used when converting balance sheet figures.
- EURNOK YTD average rate is used when converting P&L figures.
*In late June & July 2024, the company issued 2,007,848 new shares in a direct share issue at NOK 49 per share. The NAV return for 2024 has been adjusted to account for this event, with the return KPI based on the operational return for three first quarters in 2024, excluding cash proceeds and the newly issued shares.
Group key figures | 30/09/2024 | 31/12/2023 | 30/09/2023 |
Fair value of portfolio (MNOK) | 1 245 | 1 121 | 1 110 |
Fair value of portfolio (MEUR) | 105.9 | 99.8 | 98.6 |
Value of equity based on NAV - BSP method (MNOK) | 597 | 460 | 450 |
Value of equity based on NAV - BSP method (MEUR) | 50.7 | 40.9 | 40.0 |
Annualised contracted rent (MNOK) | 105.4 | 93.6 | 90.5 |
Annualised contracted rent (MEUR) | 8.9 | 8.3 | 8.0 |
Net income from property management (IFPM) (MNOK) | 20.1 | 33.3 | 27.2 |
Net income from property management (IFPM) (MEUR) | 1.7 | 2.9 | 2.4 |
NOI yield (investment projects) | 8.00 % | 8.06% | 7.81 % |
Dividend yield (NAV) | 2.40%* | 2.44% | 2.44 % |
Occupancy rate | 100% | 100% | 100 % |
WAULT (years) | 8.8 | 9.1 yrs | 9.5 yrs |
IBD (incl. mezzanine facility) (NOK) | 659 | 656 | 660 |
IBD (incl. mezzanine facility) (EUR) | 56.0 | 58.3 | 58.66 |
LTV investment portfolio (incl. mezzanine facility) | 52.90% | 58.43% | 59.50 % |
Net LTV (inc. Cash) | 49.63% | 56.37% | 57.18 % |
Interest coverage ratio (ICR) - Group | 1.74 | 2.09 | 2.23 |
Interest coverage ratio (ICR) - SPV finance | 2.11 | 3.10 | 3.24 |
Terms/abbreviations used in this report:
- Fair value of portfolio = valuation of the real estate assets
- NOI = Net operating income from property portfolio (incl.internal property management expenses)
- NOI yield = NOI / Market value of the investment portfolio excluding development land value (land bank).
- Net rent = Income from rental activity from property portfolio minus (-) all unrecovered property expenses (not including internal property management fees).
• | IFPM (Income From Property Management) = Profit/loss | before tax excluding depreciations, profit/loss/value | movements on properties, realised investments, cur- | |
rency and other financial instruments. | ||||
• | IBD = Interest-Bearing Debt - all outstanding debt to credit institutions and/or other credit facilities | |||
• | LTV = Loan to Value ratio | |||
• | EBITDA = Earnings before interest, tax, depreciation and amortisation | |||
• | WAULT = Weighted average unexpired lease term | 9 | ||
• | Interest Coverage Ratio (ICR) Group - Group EBITDA/all interest paid | |||
• | Interest Coverage Ratio (ICR) SPV finance - Consolidated | EBITDA of real estate subsidiaries/interest paid from real estate finance |
- ROE - Return on Equity
Baltic Sea Properties AS | Quarterly report | Q3 2024 |
Financial results
Quarterly report Q3 2024 (unaudited)
Rental income performance
For the first three quarters of 2024, our rental income reached mEUR 6.22, representing a 4.1% increase from mEUR 5.98 reported at the end of third quarter 2023.
This growth is primarily due to CPI adjustments on existing leases.
Operational cost and net rent
Direct ownership costs for the first three quarters of 2024 amounted to mEUR 0.19, down from mEUR 0.23 in the same period last year. Net rent amounted to mEUR 6.03, up from mEUR 5.74, showcasing that the majority of direct owner costs are recovered through the lease agreements.
Administration Costs and Other Operating Expenses
Administration costs for the period were mEUR 1.04, slightly up from the previous year. Other operating expenses increased to mEUR 0.47 from mEUR 0.34 per 30th September last year, mainly driven by costs related to newly signed development projects and the capital raise completed in June and July.
Net income from property management
Net income from property management (IFPM) stood at mEUR 1.79, a decrease from mEUR 2.40 reported at the end of the third quarter of 2023. The reduction in IFPM is primarily driven by the significant increase in funding costs and one time costs related to the capital raising process. However, we observe improvements on funding costs with lower forward curves for the EURIBOR (3-month EURIBOR decreased from 4.0% to 3.1% during Q2), whilst 1 to 5 year Swap rates are currently around 2.5%. This will have a major influence on improving IFPM going forward. Additional costs associated with project development activities also impacted the IFPM.
Fair Value Adjustments and Valuation Methodology
Despite the pressures on valuations over the last few years, BSP has managed to maintain a steady return, primarily due to our conservative approach to valuation methodology, CPI-adjustments and improvement in some of our lease agreements through professional asset management preserving our portfolio value throughout. This strategy has laid a strong foundation for the future, positioning us well to capitalise on what we believe will be improving yields and lower discount rates in the medium to longer term period.
During the first three quarters of 2024, the valuation of our investment properties increased by mEUR 1.01. Additionally, the activation of development costs and the completion of solar panel installations increased the fair value by a total of mEUR 5.07.
We continue to employ the standard Discounted Cash Flow (DCF) method for our valuations, conducted by independent valuators. As of 30th September 2024, the portfolio was valued at mEUR 105.9, up from mEUR 99.8 at year-end 2023.
Interest Costs and Finance Expenses
We have experienced higher funding costs compared to the same period last year, with net realised interest costs and finance expenses reaching mEUR 2.79, an increase from mEUR 2.12 reported per end of third quarter 2023. This increase aligns with the high global interest rate market, yet our financial management maintains a healthy margin above our covenant thresholds. For further information on our finance expenses, please see pages 12-13.
Profitability and Taxation
Net profit after tax for the first three quarters of 2024 was mEUR 2.40, compared to mEUR 1.49 for the same period in 2023.
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