The real estate investment company INVL Baltic Real Estate will pay out EUR 20.4 million of dividends. That decision was adopted at a meeting of the company’s shareholders today. It was also decided to increase the company’s maximum debt level to 80% of the value of its real estate and to change the provider of depository services to Šiaulių Bankas, thus reducing the service fees.
“Our most important goal remains the return that’s earned for investors, so, after successfully completing the transaction to sell the IBC Business Centre, we proposed paying out the money that was obtained as dividends. We believe that in the current circumstances of the coronavirus pandemic, shareholders will be able to use the payments they receive for new investments or other needs,” said Vytautas Bakšinskas, a member of the INVL Baltic Real Estate investment committee.
The proposal to pay dividends of EUR 1.55 per share was made by INVL Asset Management, the company that manages INVL Baltic Real Estate. The possibility of paying such dividends arose when the company in March this year sold the IBC Business Centre for EUR 33 million and the transaction’s value was used on the balance sheet for the end of 2019. The dividends will be paid out within a month of this decision. Investors will be eligible to receive them who are shareholders of INVL Baltic Real Estate at the end of business on 24 April this year. Based on the company’s share price on 8 April 2020, the dividend yield is 46.7%.
Also approved during the meeting was a decision to adjust the company’s dividend policy as of next year, increasing dividends to about 5% of the future net asset value, which would amount to EUR 0.09 per share.
According to Vytautas Bakšinskas, the decision to increase the company’s maximum debt level will make it possible to borrow for bigger projects. “We intend to continue maintaining a moderate level of debt, currently the figure is about 56%. The change of depository will let us reduce service fees,” he said. The decision to increase the maximum debt level is associated with a change of the articles of association, therefore it, as well as the decision to change the depository, will take effect when the Bank of Lithuania’s approval is obtained, he noted. Following the adoption of the decisions, investors who did not approve at least one of them or did not take part in the meeting will have the opportunity to sell the shares of INVL Baltic Real Estate which they hold for the net asset value.
The value of the company’s property holdings at the end of 2019 was EUR 71.9 million and during last year increased by EUR 13.6 million (including a revaluation of EUR 11.5 million, also assessing the IBC Business Centre). It is calculated that between the spring 2016 completion of a public share offering and the end of 2019, the company earned a high average annual return of nearly 19% for investors.
According to audited figures, in 2019 INVL Baltic Real Estate earned a net profit of EUR 10.4 million, or 3.3 times more than in 2018. The company’s consolidated equity at the end of 2019 was EUR 44 million, or EUR 3.35 per share, and compared to the end of 2018 increased 29% (also taking into account dividends that were paid out).
The 2019 profit and net asset value were also influenced by the transaction, completed in March this year, to sell the IBC Business Centre. The properties sold in the deal were valued on INVL Baltic Real Estate’s balance sheet for the end of 2019 at the transaction price, as required by accounting standards. The impact of the transaction on INVL Baltic Real Estate’s 2019 profit was EUR 7.6 million and its impact on the company’s net asset value per share was EUR 0.58.
INVL Baltic Real Estate’s consolidated net operating income from its properties in 2019 was EUR 2 million, or 33% less than in 2018. That result was significantly influenced by renovated premises, also at the IBC Business Centre, as those ongoing maintenance expenses were assessed as costs. The company’s consolidated revenue was 1.3% bigger than in 2018, at EUR 5.9 million, of which consolidated leasing income from owned properties increased 2.6% to EUR 4.6 million.
At the end of 2019, INVL Baltic Real Estate managed real estate in Vilnius and Riga: office and commercial premises at the Vilnius Gates complex in the Lithuanian capital, the IBC Business Centre near Konstitucijos Avenue, office buildings in the Old Town on Vilniaus Street and in Šiaurės Miestelis, and the Dommo Business Park manufacturing, warehouse and office complex beside the Riga bypass. The company’s property holdings had a total area of 56 900 sq. m. and occupancy levels between 67% and 100%. In March this year, INVL Baltic Real Estate sold the 22 700 sq. m. IBC Business Centre in Vilnius for EUR 33 million.
Since 22 December 2016, INVL Baltic Real Estate has operated as a closed-end investment company. Management of the company was assumed by INVL Asset Management, one of Lithuania’s leading asset management firms. The company will operate as a closed-end investment company until 2046, with extension possible for another 20 years.
