UPP Olaines O U: UPP Olaines OÜ Consolidated Audited 2022 Annual Report

UPP Olaines OÜ Consolidated Audited 2022 Annual Report

Management report

UPP Olaines OÜ (hereinafter "the Company" and together with subsidiaries "the
Group") was formed for the financing, acquisition and management of the Olaines
Logistics Park investment property (buildings and land). Olaines Logistics Park
has two warehouse buildings: warehouse building 1 and warehouse building 2 and
is located in Šarlotes, Olaines County, Olaines Municipality, Latvia, land
register number 8080 003 0029, recorded in the land register of Olaine
Municipality No. 5439. The area of Olaines Logistics Park is 37 204 m2 and the
major tenant is Maxima Latvija SIA. 

The company was formed on 24 August 2017 and was inactive until 15 December
2017 when it acquired the Olaines Logistics Park cold storage. 

UPP Olaines OÜ consolidated total revenue for 2022 was EUR 2.626 million (2021:
EUR 2.557 million), up around 3% year-on-year. Operating profit for the
financial year was EUR 3.276 million (2021: EUR 2.264 million), up 44.7%. Net
profit for the financial year was EUR 2.220 million (2021: EUR 1.291 million),
up 72%. Growth in both Operating- and net profit is attributable to gains
arising from revaluation of investment property. 

On 2 May 2022, Maxima Latvija SIA and Olaines Logistics SIA signed a lease
extension whereby the lease term was extended to 30 April 2027. A plan for
capital expenditures was also agreed whereby lighting at the logistics centre
will be replaced with LED lighting, floors will be repaired and the asphalt
concrete surface of the property will be repaired and other improvements will
be made. 

On 30 March 2023, the Group extended its loan term with Luminor Bank AS to
February 2025. The principal of the loan is also increased in order to finance
the acquisition of a planned 2 MW solar park including the land for it. The
bank's interest rate margin is increased by 35 basis points to 2.75% plus
three-month Euribor. The Group has various strategies under consideration for
the mitigation of Euribor-dependent interest rate risk. 

The macroeconomic outlook is uncertain, inflation looks to be subsiding but
remains a multiple of the 2% target set by the European Central Bank (ECB) for
price stability. There is uncertainty on what level key interest rates will
peak and what is the long-term outlook for key interest rates. 

Sudden increase in borrowing cost has significantly impacted the Baltic
commercial real estate market. Transaction volume has dried up due to widening
of the spread between buyer's and seller's expectations. Price inflation in
construction and wage expenses has also inhibited real estate development.
Occupancy rates in logistics properties in the Baltic States, however, remain
extremely high and tenant payment behaviour is solid. 




     UNITED PARTNERS
     Siim Sild
     Managing Director
     [phone]
     [e-mail]

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