LHV Institutional Baltic Insight, August 24th, 2020
* The COVID-19 pandemic is hurting businesses worldwide, and Baltic Horizon Fund (‘BHF’; ‘NHCBHFFT ET’), as well as EfTEN Real Estate Fund III (‘EfTEN’; ‘EFT1T ET’ (jointly referred to as the “Fundsâ€), are also feeling the heat. Both Funds have cautioned about the impact of the COVID-19 crisis as it is putting pressure on tenants, especially within the retail and office sectors.* The Funds may be considered comparable in the sense that they are both Baltic property funds, but there are some distinct differences between the two. For comparative purposes, though, we have used the same underlying key assumptions for both Funds. The only difference is the additional premium that we assigned to BHF to reflect what we perceive it to have a slightly higher COVID-19 risk exposure due to the heavier retail weighting. On our scale of 1-5, we have given BHF a risk score of 3.5 and EfTEN a score of 3.0. This lowers the company-specific risk premium for EfTEN relative to BHF.
* In addition to the CDDM, we considered several peer multiples, including: • P/E • EV/EBITDA • Distribution yield • P/B • P/EPRA NAV. We have used the same peer multiples for both Funds. Updated fair value ranges are attached. Previous implied FVRs for EfTEN and BHF were EUR 16.20-17.00 and EUR 1.30-1.45 respectively. New implied FVRs are EUR 17.50-18.40 and EUR 1.05-1.15 respectively. Please also refer to the tables in the attachment.
LHV Bank is an independent pan-Baltic bank, based on Estonian capital. The company was founded in 1999 by two founders of Hansapank (today’s Swedbank in the Baltics) and has been offering a full range of investment services for 15 years. In May 2009, LHV received a credit institution licence allowing it to provide all banking services.
The head office is situated in Tallinn, Estonia. Cross-border services are offered in Vilnius, Lithuania and in Riga, Latvia. LHV provides brokerage (institutional and retail), asset management, banking and capital markets services. Compared to other banks, we are more innovative and have more solid experience in investment and entrepreneurship.
The Bank, together with the Group asset management company employs over 320 people. LHV Group shares are listed on Nasdaq Tallinn.
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