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Eastern Property Holdings Limited (EPH) announces Third Quarter 2019 Financial Update

29 November 2019, Road Town, Tortola, BVI

KEY EVENTS

  • In August 2019 the Company signed the agreement to acquire 100% of ownership interest  in the currently under construction office and retail complexes QBC 1 & 2 as well as the parking garage QBC 7 located in Quartier Belvedere,  Vienna, Austria. The closing of the transaction will occur after finalization of construction and is expected for Q1 2021 also subject to various other customary closing conditions. On 19 August 2019, the Company has paid EUR 20.00 million (US$ 22.5 million) as a down payment.
  • The Company’s rental properties are performing well and generate sufficient cash to cover the Company’s operating expenses, service the debt and partially finance its new acquisitions.
  • RUB and EUR,  major currencies of the Group’s operations, continue to be volatile and affect the Company’s operating results and net asset value. RUB  and EUR weakened against USD by approximately 3% and 4% since last reported date of 30 June 2019. In average, for 9 months 2019 RUB depreciated by 6% against USD and EUR – by 6.4% against USD in comparison to 9 months 2018.

FINANCIAL HIGHLIGHTS

The above key events led to the following main changes in the Company’s financial results for Q3 2019:

  • During the 9 months of 2019 EPH rental properties generated $56 million of net rental income (9 months 2018: $51.6 million). The contribution to net rental income of each property is presented in the table below. The decrease of income in Polar Lights, Magistral’naya and City Gate is caused primarily by compression of USD translation of Ruble- and Euro-denominated rental revenues due to average Ruble and Euro depreciation in comparison to 9 months 2018. It was fully compensated by the increase of income in other properties as well as the additional income generated by new Austrian property QBC 4 acquired in February 2019;
  • For 9 months of 2019 FX loss recognised in the Company’s income statement was partially overlapped by positive change in currency translation adjustment recognized directly in equity; so the overall negative impact of exchange rate fluctuations in the reporting period  is $8.4 million;
  • Slight compression in USD equivalent of fair values of European properties and debt denominated in EUR as compared to the published HY 2019’ results is caused by RUB and EUR depreciation against USD as mentioned above.


Significant Q3 2019 Income and Expense Items

Net Rental Income, US$ 30.09.2019 30.09.2018 Change YoY
Berlin House 10,222,046 9,225,375 996,671
Geneva House 10,946,992 10,304,785 642,207
Polar Lights 6,422,368 7,895,696 (1,473,328)
Hermitage Plaza 20,633,362 19,271,929 1,361,433
Arbat 120,562 0 120,562
Magistral'naya 484,200 509,517 (25,317)
City Gate 3,248,954 3,556,392 (307,438)
WLC 1,700,164 865,578 834,586
QBC 4 2,272,936 0 2,272,936
Total 56,051,584 51,629,272 4,422,312
       
       
YoY changes in Income/Expense Items, US$ 30.09.2019 30.09.2018 Change YoY
Net foreign exchange gain/ (loss) (19,913,817) 39,857,913 (59,771,730)
Finance costs (24,452,073) (23,668,774) (783,299)

Significant Q3 2019 changes in Financial Position

Assets,  US$ 30.09.2019 30.06.2019 31.12.2018 Change to HY Change to LY
Investment property* 978,076,726 991,816,005 841,451,779 (13,739,279) 136,624,947
Russia 635,266,447 634,748,670 606,316,348 517,777 28,950,099
Western Europe 342,810,279 357,067,335 235,135,431 (14,257,056) 107,674,848
Prepayment for aqcuisition of subsidiaries 22,504,000 0 0 22,504,000 22,504,000
Cash & cash equivalents 33,265,345 44,398,917 41,693,596 (11,133,572) (8,428,251)
           
Liabilities, US$ 30.09.2019 30.06.2019 31.12.2018 Change to HY Change  to LY
Borrowings 658,346,090 661,800,919 553,507,629 (3,454,829) 104,838,461
USD-denominated 488,614,559 484,704,242 483,753,745 3,910,317 4,860,814
EUR-denominated 169,731,531 177,096,677 69,753,884 (7,365,146) 99,977,647

* - Based on external appraisals as of 30.06.2019

Eastern Property Holdings Ltd. is an investment company listed on SIX Swiss Exchange which holds interest in office, residential and retail properties. EPH is managed by Valartis International Ltd. a wholly-owned subsidiary of Valartis Group AG.

Additional information on Eastern Property Holdings is available by contacting Anna Bernhart Tel: +41 44 503 5400.

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