Exploring Baltic Horizon Fund's Strategic Path for Growth
The Management Board of Northern Horizon Capital AS has shared the financial results of Baltic Horizon Fund for the latest fiscal year. In this succinct report, we will delve into the Fund's strategic endeavors, performance indicators, and financial outcomes of 2024.
Implementing Our Strategy
In its ongoing quest for growth and stability, the Fund's management has adopted a comprehensive strategy that hinges on key performance indicators (KPIs). This decision highlights the importance of clear benchmarks for tracking progress and advancing the Fund's objectives. Establishing these KPIs not only promotes transparency but also fosters accountability and better decision-making.
Strategic Objectives for the Upcoming Years
Looking ahead, the management team has earmarked several primary goals:
- Achieve an occupancy rate of at least 90% by the end of 2025.
- Maintain a Loan-to-Value (LTV) ratio of 50% or lower.
- Evaluate the sale of non-core assets over the next 12 months.
- Establish and execute a clear ESG and refurbishment plan aimed at realizing the portfolio’s NOI potential of 130 EUR/sq.m. by 2027.
Celebrating Our Accomplishments in 2024
Despite encountering challenges, we take pride in several notable milestones achieved in 2024, including:
- Securing 100% BREEAM certification across our entire portfolio.
- Though we received a 3-star GRESB rating, we've thoroughly analyzed the results and are implementing an action plan to ascend to a 4-star rating in 2025.
- We recorded an impressive occupancy rate of 86.5%, with a steady increase as tenants begin to move in.
- Implemented a disposal strategy aimed at lowering LTV levels, with disposal processes initiated in 2025.
- Continuing with our foundational strategy in 2025 to solidify the Fund's financial standing and unlock the full potential of our portfolio.
Future Outlook and Commitments
As we pivot to 2025, our focus will be on innovative and sustainable solutions, tailored to meet tenant demands and align with evolving market conditions. Increasing occupancy rates and reducing LTV will be at the forefront, aided by strategic bond repayments.
The management has proactively taken steps to improve financial stability by decreasing leverage through targeted bond repayments. This method aims to lower financial pressure and set the stage for enhanced performance.
Sustainability and Environmental Commitment
Our commitment to social and environmental responsibilities remains unwavering, as evidenced by achieving 98% green leases across our portfolio. Our target is to further this commitment in the upcoming year.
In tandem with enhancing our financial position, the Fund is dedicated to optimizing its debt service ratio and achieving lower LTV figures. By increasing occupancy rates and improving property concepts, we endeavor to boost asset performance and maximize net operating income. Our prioritization of adaptive leasing strategies, proactive property repositioning, and targeted investments in high-demand segments showcases our commitment to creating enduring value for our investors, even in a fluctuating market environment.
Baltic Horizon Achieves 100% BREEAM Certification
2024 was a significant year as Baltic Horizon marked its first BREEAM Excellent certification, particularly with the Meraki business center reaching the final certification milestone. As we progress through 2025, maintaining 100% certification coverage will remain a key focus.
Evaluating GRESB Performance
The Fund received a 3-star GRESB rating in 2024. While we improved our management score from 27 to 29 points, our performance score decreased due to data gaps from properties sold during the reporting period. We've rolled out a GRESB improvement plan, with aspirations of regaining a 4-star rating in the next review.
Financial Performance Insights
The Baltic Horizon Fund faced a net loss of EUR 16.8 million in 2024, contrasting with a loss of EUR 23.0 million the previous year. This outcome was primarily influenced by property valuation losses. Earnings per unit for the year stood at negative EUR 0.13 compared to negative EUR 0.19 in 2023.
In 2024, the Fund reported consolidated net rental income of EUR 11.6 million, down from EUR 14.6 million in 2023. This reduction is attributed to significant property sales in the previous year.
Despite challenges, the portfolio's retail segment emerged as a strong contributor, comprising 53.3% of net rental income, followed by the office segment at 41.7%.
Investment Properties Overview
As of year-end 2024, the Baltic Horizon Fund managed a portfolio of 12 income-generating investment properties in the Baltic capitals, valued at EUR 241.2 million. The overall performance reflects the fluctuations in exit yields and adjustments in the weighted average cost of capital.
Understanding Asset Value Metrics
By December 31, 2024, the Fund's Gross Asset Value (GAV) stood at EUR 256.0 million, slightly down from EUR 261.1 million in the preceding year due to negative revaluation impacts. The Net Asset Value (NAV) decreased to EUR 98.1 million, influenced by the overall property revaluation process.
Key Contact Information
If you have any questions or need further clarity, please get in touch with Tarmo Karotam, the Baltic Horizon Fund manager, via e-mail at tarmo.karotam@nh-cap.com or visit our website:www.baltichorizon.com.
Frequently Asked Questions
What were the main financial outcomes for Baltic Horizon Fund in 2024?
In 2024, the Fund experienced a net loss of EUR 16.8 million and consolidated net rental income of EUR 11.6 million.
What strategic objectives has Baltic Horizon Fund set for 2025?
The Fund aims to achieve a portfolio occupancy rate of at least 90%, maintain an LTV below 50%, and continue a robust ESG strategy.
How does Baltic Horizon Fund plan to enhance financial stability?
The Fund is focusing on reducing leverage through strategic bond repayments and increasing occupancy rates while enhancing property concepts.
What sustainability targets has the Fund established?
With a goal of reaching 100% green leases, the Fund is committed to enhancing its environmental performance in 2025 and beyond.
What achievements did Baltic Horizon Fund celebrate in 2024?
Celebrating 100% BREEAM certification across its entire portfolio and a solid improvement strategy for a higher GRESB rating were major milestones.
