Market announcement

Title

Baltic Horizon Fund consolidated unaudited results for Q1-Q3 2023

Message

Management Board of Northern Horizon Capital AS has approved the unaudited
consolidated interim financial statements of Baltic Horizon Fund (the Fund) for
the first nine months of 2023.

Leasing activity
Throughout Q1-Q3 2023, the Fund secured lease extensions with anchor tenants in
retail assets. Notably, the anchor grocery tenant Rimi extended its leases on
the same favourable terms in both Postimaja and Galerija Centrs. The H&M store
will be upgraded in Postimaja to include the H&M Home concept in November 2023,
while ARKET will open in Galerija Centrs in December 2023.

Meanwhile, Europa SC demonstrated a surge in letting activity during Q1-Q3
2023, with the Fund successfully securing deals for a total of 2,941 sq. m with
thirteen tenants, including prominent names like Pi Pilates, Optometrijos
Centras, Codekus and others. In addition, the Fund recently finalized a new
lease agreement with a prominent anchor tenant IKI  at Europa SC, signing a ten-
year lease for an approximate total lettable area of 1,900 sq. m.  The opening
of the new anchor tenant's store, which will be at the heart of the upgraded
concept of the shopping centre, is anticipated to take place early next year.

In response to evolving market dynamics, the Fund is actively engaged in
reletting efforts for current office vacancies and forthcoming office spaces,
particularly in light of EMERGN's decision to reduce their rented area in LNK
and the SEB exit from Upmalas Biroji. Proactive measures are being taken to fill
these vacancies, with the Fund securing the Latvian State Police as a tenant for
approximately 4,060 sq. m for 12 years in Upmalas Biroji to partially offset the
vacancy from SEB premises. The agreement with the Latvian State Police was
signed in November and the move is expected early next year. The occupancy rate
of Upmalas Biroji wil increase to 60% following the takeover of these premises.
Additionally, intense negotiations are underway to ensure maximum occupancy in
the Lincona building with a newly signed deal with Pet24 to open a pet store on
the ground floor.

Outlook

An  important milestone in our financial journey  was the refinancing of our EUR
50 million bond issue in Q2 2023. We initiated a new bond issue, raising EUR 42
million  to optimize our capital structure.  The first tranche, amounting to EUR
20 million,   matures   in  May  2024. Following  the  disposal  of  the  Duetto
properties,  the Fund proactively redeemed EUR  7.5 million of the first tranche
in  August  2023. The  Fund's  management  team  remains  resolute  in  reducing
financial leverage at the earliest viable opportunity.

Our  management team  remains committed  to exploring  additional divestment and
refinancing  opportunities aimed at repaying the outstanding EUR 12.5 million of
the  first tranche before its maturity date.  As part of this commitment, we are
actively  engaged in negotiations with multiple financial institutions to secure
additional   funds  and  negotiating  potential  asset  disposals,  which  would
potentially facilitate the redemption of bonds.

Looking  ahead, the Fund is determined  to execute multiple early redemptions of
bonds  at  the  end  of  2023/in early  2024. These actions are aligned with our
overarching strategy to gradually reduce leverage levels, with the ultimate goal
of  reaching  a  leverage  ratio  of  approximately  50% following  all  planned
refinancing activities in the upcoming year.

Net result and net rental income
The  Group recorded a net loss of  EUR 15.2 million for Q1-Q3 2023 against a net
profit  of EUR 6.2 million for the  corresponding period in 2022. The net result
was  strongly impacted  by the  negative valuation  result of  EUR 14.6 million.
Meanwhile  in Q1-Q3 2022, the valuation resulted in a net fair value gain of EUR
0.2 million. The sale of the shares in BH Domus Pro UAB which owns a retail park
and  an office  building and  BH Duetto  UAB, which  owns two  office buildings,
resulted  in the loss  on disposal of  EUR 3.8 million. The  net result was also
impacted by the higher financial expenses. Earnings per unit for Q1-Q3 2023 were
negative at EUR -0.13 (Q1-Q3 2022: positive at EUR 0.05).

The  Group earned  net rental  income of  EUR 11.7 million  in Q1-Q3 2023 (Q1-Q3
2022: EUR  13.0 million). The  results for  2023 include two  months' net rental
income  of the Domus Pro  Retail and Office property  (EUR 0.3 million) and five
months' net rental income of the Duetto properties (EUR 1.2 million), which were
sold  in February and May 2023, respectively.  Rent indexations and the recovery
of  income improved the net  rental income of the  same portfolio mix (like-for-
like portfolio).

On  an EPRA like-for-like basis, portfolio  net rental income increased by 4.9%
year on year, mainly due to the recovery in the retail segment.

BREEAM In-Use certificates
Baltic  Horizon Fund  has obtained  BREEAM In-Use  certificates for its Estonian
retail  assets: Postimaja, CC Plaza and Pirita - have all achieved BREEAM In-Use
certification  with a 'Good' rating. The BREEAM In-Use certificate is one of the
most  important instruments for assessing sustainable commercial construction in
Europe.  It has been a  key ESG priority for  the Fund to certify its properties
with  the internationally recognized BREEAM standards. In 2021, the portfolio of
office  buildings received  BREEAM certification,  and in  2022, a costed retail
portfolio  certification  plan  was  implemented  with  the goal to have a 100%
certified portfolio by the end of 2023.

GRESB benchmarking
In  Q3 2023, Baltic  Horizon maintained  the GRESB  4 star rating for the second
year  in a row. In the assessment, the  fund achieved a total score of 82 out of
100, representing  the  third  highest  GRESB  score  in  the 'Northern Europe |
Diversified  -  Office/Retail  |  Listed'  peer  group.  The  GRESB  Real Estate
Assessment  is an investor-driven  global ESG benchmark  and reporting framework
for  listed property companies, private property funds, developers and investors
that  invest directly in real estate.  The achievement of GRESB ratings confirms
the Fund's continuous efforts in the ESG field.

Gross Asset Value (GAV)
At  the end of Q3 2023, the Fund's GAV was EUR 269.5 million (31 December 2022:
EUR  344.0 million), 21.7% lower  than at  the end  of the  previous period. The
decrease  is mainly related to the sale of the shares in BH Domus Pro UAB and BH
Duetto UAB.

Net Asset Value (NAV)
At  the end of Q3 2023, the Fund's NAV was EUR 118.0 million (31 December 2022:
EUR  133.7 million). Compared to the year-end  2022, the Fund's NAV decreased by
11.7%. The  increase in operational performance was offset by a EUR 14.6 million
property  valuation loss and  EUR 3.8 million loss  from the disposal  of the BH
Domus  Pro UAB and BH Duetto UAB shares. Excluding the impact of valuations, the
NAV  at the end of  Q3 2023 would have been  EUR 132.2 million or EUR 1.1049 per
unit.  As of  30 September 2023, IFRS  NAV per  unit decreased to EUR 0.9862 (31
December  2022: EUR  1.1172), while  EPRA  net  tangible  assets  and  EPRA  net
reinstatement  value were EUR  1.0195 per unit (31  December 2022: EUR 1.1865).
EPRA net disposal value was EUR 0.9827 per unit (31 December 2022: EUR 1.1143).

Investment properties
At  the end of Q3  2023, the Baltic Horizon Fund  portfolio consisted of 12 cash
flow  generating investment properties in the Baltic capitals. The fair value of
the Fund's portfolio was EUR 256.7 million (31 December 2022: EUR 333.1 million)
and  incorporated a total net leasable area of 119.2 thousand sq. m.  During Q1-
Q3  2023 the  Group  sold  the  Domus  PRO buildings for approximately EUR 23.5
million  and the  Duetto I  and Duetto  II buildings  for approximately  EUR 37
million, invested EUR 1.2 million in reconstruction projects and EUR 1.2 million
in the existing property portfolio.

Interest-bearing loans and bonds
As  of  30 September  2023 interest-bearing  loans  and  bonds  (excluding lease
liabilities)  were  EUR  144.0 million  (31  December  2022: EUR 194.6 million).
Outstanding  bank loans  decreased due  to the  repayment of  the Domus  Pro and
Duetto   loans,   part  of  Europa  and  Kontor  loans  and  regular  bank  loan
amortisation.  Also, the Fund redeemed a part of  the bonds in the amount of EUR
7.5 million on 1 August 2023. The redemption was accompanied by the reduction of
the  nominal value  of the  bonds to  EUR 82,142.85 per  bond. The total nominal
amount  of  the  bonds  before  the  redemption was EUR 42,000,000 and after the
redemption  is EUR  34,499,997. Annual loan  amortisation accounted  for 1.4% of
total debt outstanding.

Cash flow
Cash  inflow from core  operating activities in  Q1-Q3 2023 amounted to EUR 8.7
million  (Q1-Q3  2022: cash  inflow  of  EUR  10.8 million).  Cash  inflow  from
investing  activities  was  EUR  21.4 million  (Q1-Q3 2022:  cash outflow of EUR
11.1 million)  due to the sale of  the shares in BH Domus  Pro UAB and BH Duetto
UAB.  Cash outflow from financing activities  was EUR 27.5 million (Q1-Q3 2022:
cash  outflow of EUR 10.9 million). In  Q1-Q3 2023, the Fund redeemed and issued
bonds,  repaid  the  Domus  Pro  and  part  of the Europa loan, and paid regular
interest  on bank loans and  bonds. In March 2023 the  Fund repaid the Domus Pro
loan  (EUR  11.0 million)  and  EUR  6.0 million  of  the  Europa loan using the
proceeds  from the  sale of  the shares  in BH  Domus Pro  UAB. In  May the Fund
redeemed  its EUR  50 million unsecured  5-year bond  issue, completed a private
placement  of  5-year  bonds  and  issued  bonds  in the total volume of EUR 42
million.  In August the Fund early redeemed a part of the bonds in the amount of
EUR  7.5 million. During August, the Fund successfully refinanced the Kontor SIA
loan  until 2028, reducing the  original Kontor SIA  loan by EUR 1.2 million. At
the  end of Q3 2023, the Fund's  consolidated cash and cash equivalents amounted
to  EUR  7.9 million  (31  December  2022: EUR 5.3 million). Operating costs are
fully covered by cash flows generated by rental activities.

Key earnings figures

 EUR '000                                        Q3 2023     Q3 2022 Change (%)
-------------------------------------------------------------------------------
 Net rental income                                 3,228       4,298    (24.9%)

 Administrative expenses                           (572)       (752)    (23.9%)

 Losses on disposal of investment properties        (59)           -          -

 Valuation gains (losses) on investment
 properties                                          (3)        (14)    (78.6%)

 Operating profit (loss)                           2,594       3,532    (26.6%)

 Net financial expenses                          (2,817)     (1,502)      87.5%

 Profit (loss) before tax                          (223)       2,030   (111.0%)

 Income tax                                           12       (132)     109.1%
-------------------------------------------------------------------------------
 Net profit (loss) for the period                  (211)       1,898   (111.1%)
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Weighted average number of units
 outstanding (units)                         119,635,429 119,635,429          -

 Earnings per unit (EUR)                          (0.00)        0.02          -
-------------------------------------------------------------------------------


Key financial position figures

 EUR '000                                     30.09.2023  31.12.2022 Change (%)
-------------------------------------------------------------------------------
 Investment properties in use                    256,662     333,123    (23.0%)

 Gross asset value (GAV)                         269,462     343,963    (21.7%)



 Interest-bearing loans and bonds                144,006     194,569    (26.0%)

 Total liabilities                               151,478     210,308    (28.0%)



 IFRS Net asset value (IFRS NAV)                 117,984     133,655    (11.7%)

 EPRA Net Reinstatement Value (EPRA NRV)         121,966     141,943    (14.1%)
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Number of units outstanding (units)         119,635,429 119,635,429          -

 IFRS Net asset value (IFRS NAV) per unit
 (EUR)                                            0.9862      1.1172    (11.7%)

 EPRA Net Reinstatement Value (EPRA NRV) per
 unit (EUR)                                       1.0195      1.1865    (14.1%)
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Loan-to-Value ratio (%)                          56.10%      58.40%          -

 Average effective interest rate (%)               5.10%       3.00%          -
-------------------------------------------------------------------------------


During  Q3 2023, the  average actual  occupancy of  the portfolio  was 79.5% (Q2
2023: 87.2%). The  occupancy  rate  as  of  30 September 2023 was 77.1% (30 June
2023: 84.6%). The   overall  occupancy  rate  was  strongly  influenced  by  the
decreased occupancy in the office segment following the expiry of the lease with
the  anchor tenant SEB  in Upmalas Biroji  BC. The property  management team has
signed  a  new  agreement  with  Latvian  State  Police  in Upmalas Biroji BC to
partially fill the space vacated by SEB in August 2023.

Sky  SC and  Vainodes I  are now  fully occupied.  The Fund's  retail and office
leasing  teams  were  expanded  in  2022 to  speed  up  the leasing process. The
agreement with the anchor tenant ARKET in Galerija Centrs was signed in December
2022. Construction  works for ARKET fit-out started  in Q1 2023, with an opening
planned in December 2023.

Expiry  of the agreement with the main  tenant in Upmalas Biroji BC and EMERGN's
decision  to reduce their rented area in LNK Centre had a negative impact on the
property yields in Q3 2023. The average direct property yield during Q3 2023 was
4.3% (Q2 2023: 5.3%). The net initial yield for the whole portfolio for Q3 2023
was 5.0% (Q2 2023: 5.9%).

Overview of the Fund's investment properties as of 30 September 2023

                                                 Direct        Net
                               Fair            property    initial
 Property name Sector      value(1)     NLA       yield      yield
                                                                      Occupancy
                         (EUR '000) (sq. m)  Q3 2023(2) Q3 2023(3)         rate
-------------------------------------------------------------------------------
 Vilnius,
 Lithuania

 Europa SC     Retail        35,828  17,051        3.7%       4.1%        84.2%

 North Star    Office        20,368  10,579        7.0%       7.3%        99.7%

 Meraki        Office        16,330   8,275        0.1%       0.1%        32.2%
-------------------------------------------------------------------------------
 Total Vilnius               72,526  35,905        3.6%       4.1%        76.8%
-------------------------------------------------------------------------------
 Riga, Latvia

 Upmalas       Office
 Biroji BC                   20,061  10,594        3.0%       3.6%        22.1%

 Vainodes I    Office        17,243   8,128        6.8%       8.6%       100.0%

 LNK Centre    Office        15,290   7,450        3.3%       3.7%        42.8%

 Sky SC        Retail         5,480   3,259        8.8%       8.2%       100.0%

 Galerija      Retail
 Centrs                      67,504  19,294        3.6%       4.1%        80.4%
-------------------------------------------------------------------------------
 Total Riga                 125,578  48,725        4.1%       4.8%        66.5%
-------------------------------------------------------------------------------
 Tallinn,
 Estonia

 Postimaja &
 CC Plaza      Retail
 complex                     23,100   9,232        3.7%       5.7%        95.6%

 Postimaja &
 CC Plaza      Leisure
 complex                     12,432   9,139        6.2%       6.0%        94.3%

 Lincona       Office        14,201  10,775        6.9%       7.9%        85.8%

 Pirita SC     Retail         8,825   5,425        6.3%       8.9%        97.1%
-------------------------------------------------------------------------------
 Total Tallinn               58,558  34,571        5.2%       6.8%        92.4%
-------------------------------------------------------------------------------
 Total
 portfolio                  256,662 119,201        4.3%       5.0%        77.1%
-------------------------------------------------------------------------------

 1. Based on the latest valuation as of 30 September 2023, subsequent capital
    expenditure and recognised right-of-use assets,
 2. Direct property yield (DPY) is calculated by dividing annualized NOI by the
    acquisition value and subsequent capital expenditure of the property.
 3. The net initial yield (NIY) is calculated by dividing annualized NOI by the
    market value of the property.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

                               01.07.2023- 01.07.2022- 01.01.2023-  01.01.2022-

 EUR '000                       30.09.2023  30.09.2022  30.09.2023   30.09.2022
-------------------------------------------------------------------------------
 Rental income                       3,893       5,352      13,988       15,422

 Service charge income               1,334       1,362       4,521        4,007

 Cost of rental activities         (1,999)     (2,416)     (6,786)      (6,456)
-------------------------------------------------------------------------------
 Net rental income                   3,228       4,298      11,723       12,973
-------------------------------------------------------------------------------


 Administrative expenses             (572)       (752)     (1,986)      (2,137)

 Other operating income                  -           -          15          278

  Losses    on   disposal   of
 investment properties                (59)           -     (3,810)            -

  Valuation  gains (losses) on
 investment properties                 (3)        (14)    (14,626)          158
-------------------------------------------------------------------------------
 Operating profit (loss)             2,594       3,532     (8,684)       11,272
-------------------------------------------------------------------------------


 Financial income                       74           1          75            1

 Financial expenses                (2,891)     (1,503)     (7,316)      (4,463)
-------------------------------------------------------------------------------
 Net financial expenses            (2,817)     (1,502)     (7,241)      (4,462)
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Profit (loss) before tax            (223)       2,030    (15,925)        6,810
-------------------------------------------------------------------------------
 Income tax charge                      12       (132)         709        (673)
-------------------------------------------------------------------------------
 Profit (loss) for the period        (211)       1,898    (15,216)        6,137
-------------------------------------------------------------------------------


 Other comprehensive income that is or may be
 reclassified to profit or loss in subsequent periods

 Net  gain (loss) on cash flow
 hedges                              (341)       1,308       (514)        2,604

 Income  tax  relating  to net
 gain   (loss)  on  cash  flow
 hedges                                 32       (102)          59        (217)
-------------------------------------------------------------------------------
 Other   comprehensive  income
 (expense),  net of  tax, that
 is  or may be reclassified to
 profit  or loss in subsequent
 periods                             (309)       1,206       (455)        2,387
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Total   comprehensive  income
 (expense) for the period, net
 of tax                              (520)       3,104    (15,671)        8,524
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Basic  and  diluted  earnings
 per unit (EUR)                     (0.00)        0.02      (0.13)         0.05
-------------------------------------------------------------------------------


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

  EUR '000                                    30.09.2023   31.12.2022
----------------------------------------------------------------------
  Non-current assets

  Investment properties                          256,662      333,123

  Intangible assets                                    6            6

  Property, plant and equipment                        5            1

  Derivative financial instruments                   747        2,228

  Other non-current assets                           260            -
----------------------------------------------------------------------
  Total non-current assets                       257,680      335,358
----------------------------------------------------------------------


  Current assets

  Trade and other receivables                      2,558        2,693

  Prepayments                                        307          273

  Derivative financial instruments                 1,028          292

  Cash and cash equivalents                        7,889        5,347
----------------------------------------------------------------------
  Total current assets                            11,782        8,605
----------------------------------------------------------------------
  Total assets                                   269,462      343,963
----------------------------------------------------------------------


  Equity

  Paid in capital                                145,200      145,200

  Cash flow hedge reserve                          1,226        1,681

  Retained earnings                             (28,442)     (13,226)
----------------------------------------------------------------------
  Total equity                                   117,984      133,655
----------------------------------------------------------------------


  Non-current liabilities

  Interest-bearing loans and borrowings           74,809      124,017

  Deferred tax liabilities                         2,792        7,490

  Other non-current liabilities                      906        1,240
----------------------------------------------------------------------
  Total non-current liabilities                   78,507      132,747
----------------------------------------------------------------------


  Current liabilities

  Interest-bearing loans and borrowings           69,457       71,094

  Trade and other payables                         2,855        5,644

  Income tax payable                                   -           10

  Other current liabilities                          659          813
----------------------------------------------------------------------
  Total current liabilities                       72,971       77,561
----------------------------------------------------------------------
  Total liabilities                              151,478      210,308
----------------------------------------------------------------------
  Total equity and liabilities                   269,462      343,963
----------------------------------------------------------------------


For more information, please contact:

Tarmo Karotam
Baltic Horizon Fund manager
E-mail [email protected]
www.baltichorizon.com

The  Fund is a registered contractual public closed-end real estate fund that is
managed  by Alternative Investment Fund  Manager license holder Northern Horizon
Capital  AS. Both  the Fund  and the  Management Company  are supervised  by the
Estonian Financial Supervision Authority.

Distribution: Nasdaq, GlobeNewswire, www.baltichorizon.com

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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
21:50 EET on 7 November 2023.