Eastnine (EAST) Q1 2019 earnings summary

Executive summary

• Q1 2019 pro forma rental income rose 47.9% YoY to EUR 2.947m and NOI rose 87.9% to EUR 2.689m, mainly from acquisitions and completion of 3Burės’ third tower.

• Net profit was EUR 4.957m versus EUR 0.711m; EPRA NAV per share reached EUR 11.7, up 8.3% YoY.

Financial highlights

• Profit from property management increased to EUR 1.279m from EUR 0.151m; pro forma Q1 2019 profit before tax was EUR 5.103m.

• Rental income totaled EUR 2.947m: comparable properties EUR 1.514m, completed development EUR 0.554m and acquisitions EUR 0.879m.

• Unrealised investment value gains were EUR 4.459m, including EUR 3.669m from Melon Fashion Group; unrealised property value gains were EUR 0.863m.

Outlook and guidance

• Building II of S7 was targeted for completion in Q2 2019 and Building III in Q1 2020; leasing focus includes the original 3Burės towers.

• Annualised Q1 property-management profit capacity was EUR 8.8m versus a EUR 15m target; portfolio transformation to direct real estate stood at 53% of invested equity.

• Targets include LTV below 65%, interest coverage above 2.0x, dividend of at least 50% of profit or 2% of NAV, and 13–15% Real Estate Direct ROE over five years.

• Planned work included evaluating a Riga development project, continued property certification and GRESB reporting, and exploring exit options for non-core holdings.