Net asset value (NAV) of Baltic Horizon Fund (the Fund) unit as at end of June 2020 amounted to 1.2169 EUR per unit. Compared to the previous month, NAV decreased by -9.57%. The NAV was negatively affected by a decrease in values of investment properties and negative cash flow hedge reserve movement during the month. The negative impact on the NAV was partially offset by a positive result from operating activities. The Fund’s unaudited consolidated net loss amounted to 14.5 million in June 2020.
As of 30 June 2020, the fair value of the Baltic Horizon Fund portfolio decreased to EUR 345.5 million (31 December 2019: 358.9 million). In June 2020, the portfolio valuation resulted in a fair value loss of EUR 15.7 million (-4.36% of property portfolio) primarily due to the impact of COVID-19 on the real estate industry. The portfolio valuation is based on the valuations conducted by an independent real estate appraiser Newsec Baltics as of 30 June 2020. Fair values of investment properties in the portfolio decreased mainly due to downward adjustments to valuation assumptions resulting from the uncertainty associated with the pandemic.
The change in the portfolio valuation was primarily influenced by higher discount rate assumptions and lower cash flow projections compared to the previous valuations. Discount rates for the majority of the portfolio were raised by 0.3% to reflect the expected increase in the cost of debt. Operating cash flow projections of the portfolio were lowered as a result of a decrease in EU and Baltic consumer price index level projections and increased vacancy assumptions during the years 2020-2022. Exit yields remained the same compared to 2019 valuations due to a lack of comparable market deals during COVID-19 lockdown. The summary of property valuations will be published on the Fund`s webpage. More information will be provided in the semi-annual report.
The Management Company of the Fund will continue to actively monitor the economic impact of the COVID-19 pandemic and reassess the potential impact on the Fund‘s results. At the end of June 2020, the Fund had a sufficient amount of cash (EUR 7.1 million) to cover its liquidity needs amid the COVID-19 pandemic.