Overview of Baltic Horizon Fund's 2024 Performance
Management Board of Northern Horizon Capital AS has approved the unaudited financial results of Baltic Horizon Fund (the Fund) for the twelve months of 2024.
Strategic Goals for Sustainability
In 2024, the Fund's management team made significant strides by establishing key performance indicators (KPIs), aimed at measuring and tracking performance more effectively. This initiative is driven by the necessity for clear benchmarks to evaluate progress towards the Fund's overarching objectives. By emphasizing specific KPIs, the team enhances accountability, transparency, and decision-making in operations.
Main Objectives and Targets
The focus of the Fund management team remains on several critical objectives:
- Achieving a portfolio occupancy of at least 95% by mid-2025.
- Keeping the Loan-to-Value (LTV) ratio at or below 50%.
- Considering the disposal of non-strategic assets within 18 months.
- Developing a clear ESG and refurbishment strategy to increase the portfolio’s NOI potential to EUR 18 million by 2027.
- Maintaining a portfolio that is 100% BREEAM or LEED certified.
- Achieving a minimum of 4 stars from GRESB assessment.
Achievements and Progress
This year marks key achievements for the Fund:
We have successfully attained a 100% portfolio certification, a significant milestone. Despite a 3-star GRESB rating achieved in 2024, we analyzed our assessment results and developed an action plan aiming for a 4-star GRESB rating in 2025.
While we fell short of our goal for 90% portfolio occupancy by the end of 2024, we made commendable progress, reaching an occupancy rate of 86.5% based on the signing date of leases.
Our disposal strategy evolved recently, aimed at reducing the LTV to the target level. Several disposals commenced in early 2025, with plans to finalize transactions later in the year.
Leasing and Property Management Performance
Despite a challenging environment in the Baltic real estate market, characterized by rising vacancies, the Fund has displayed resilience. The management team has been proactive in renewing existing leases and securing new contracts in 2024, with key leases signed by prominent anchor tenants including Narbutas in Meraki and Apollo Group in Coca-Cola Plaza.
Leasing Successes Amid Challenges
The Fund signed new leases covering 22,743 sq. m, yielding an annual rental income of EUR 2,945 thousand. We welcomed 61 new tenants, reflecting robust engagement with prospective clients.
By the end of December 2024, we recorded an occupancy of 82.1%. Notably, less than 20% of our leases are expected to expire within 2025, with most set to expire in subsequent years. This strategy of lease term dispersion aims to create stability for our portfolio.
Future Outlook for 2025
Moving into 2025, the Fund's strategy will adapt to emerging market needs, focusing on both occupancy improvement and LTV reduction through targeted bond repayments. Economic conditions are projected to present ongoing challenges, yet opportunities may arise as the market stabilizes.
Our plan to divest selected assets is aimed at reducing the LTV ratio below 50%, further providing the financial robustness necessary for recovery. Out of the identified properties, Postimaja and CC Plaza are on the market to align with our long-term strategy.
Engagement with Emerging Trends
In light of evolving consumer preferences and the growth of e-commerce, the Fund recognizes the need to adapt its offerings. Concepts such as entertainment within shopping centers are being explored, evidenced by the success of new leases for entertainment facilities in our properties.
Financial Highlights of 2024
In 2024, the Fund reported a net loss of EUR 16.8 million, an improvement from a net loss of EUR 23 million in 2023. The decline in the loss was largely attributed to property valuation losses.
Rental Income Insights
The consolidated net rental income for 2024 was EUR 11.6 million, reflecting a nuanced understanding of our strategic property management. The overall performance in retail and office segments has been well-monitored, indicating the necessity for ongoing improvements in property value and tenant satisfaction.
Looking to Sustain Growth
As we continue to focus on green energy initiatives and reducing reliance on gas for our properties, we remain committed to enhancing our financial metrics and achieving long-term value for our investors. The integration of diverse services in office spaces is anticipated to meet evolving tenant demands.
Frequently Asked Questions
What are the main objectives of Baltic Horizon Fund for 2024?
The main objectives include achieving at least 95% portfolio occupancy by June 2025, maintaining a Loan-to-Value ratio under 50%, and continuing a commitment to sustainability and ESG practices.
How did Baltic Horizon Fund perform in terms of occupancy in 2024?
Despite aiming for 90% occupancy by year-end, Baltic Horizon Fund achieved an occupancy rate of 86.5% based on the lease signing date.
What strategies are in place for financial stability going forward?
The Fund intends to reduce LTV through asset disposals and bond repayments, aiming for a more sustainable financial posture while focusing on asset performance.
Which notable tenants signed leases with the Fund in 2024?
Key anchor tenants such as Narbutas and Apollo Group have signed significant leases, contributing positively to rental income.
What initiatives are being taken towards green energy and sustainability?
All properties are transitioning to energy sourced from remote solar panels, with active exploration underway for solutions to minimize gas dependency.
