Baltic Horizon Fund's 2024 Performance and Future Prospects

Overview of Baltic Horizon Fund’s Performance in 2024

The Management Board of Northern Horizon Capital AS recently approved the unaudited financial results for Baltic Horizon Fund for the twelve months of the year. This report outlines the achievements, goals, and strategic initiatives of the Fund as it navigates the financial landscape.

Strategic Goals for 2024

Key Performance Indicators

In 2024, Baltic Horizon Fund's management team adopted a framework of key performance indicators (KPIs) aimed at measuring performance effectively. By establishing these benchmarks, the team fosters transparency and accountability, supporting informed decision-making.

Core Objectives

The management is dedicated to achieving the following objectives within its strategy:

• Attaining a portfolio occupancy rate of at least 95% by mid-2025.
• Maintaining a Loan-to-Value (LTV) ratio at 50% or lower.
• Considering the sale of non-strategic assets over the coming 18 months.
• Implementing clear Environmental, Social and Governance (ESG) strategies and refurbishment plans to realize a Net Operating Income (NOI) potential of EUR 18 million by 2027.
• Ensuring a fully certified portfolio adhering to either BREEAM or LEED standards.
• Achieving a minimum of 4 stars in the GRESB assessment.

Achievements and Progress in 2024

The Fund successfully achieved 100% certification across its portfolio, showcasing a commitment to quality and sustainability. Although the GRESB rating stood at 3 stars this year, the team has meticulously analyzed these results and is developing actionable strategies to secure a 4-star rating by 2025.

While the target occupancy rate of 90% by the year-end was not reached, an occupancy rate of 86.5% was achieved, demonstrating significant progress. Furthermore, the implementation of a disposal strategy initiated in early 2025 aims to align LTV levels with target metrics.

Leasing Performance and Strategic Outlook

Adaptability in a Challenging Market

Navigating through a tough real estate market in the Baltic states, Baltic Horizon Fund has shown resilience. Renewing existing leases and acquiring new tenants has been crucial in maintaining stability. Key deals included partnerships with major tenants, which underlines the robustness of the properties in the portfolio.

Future Strategy for 2025

Looking to 2025, the Fund intends to prioritize flexible and sustainable solutions to adapt to tenant needs while reducing LTV through prudent repayment measures. While the commercial real estate market will face its share of obstacles due to ongoing economic fluctuations, the management's focus on improving financial stability through strategic asset divestments is crucial.

Financial Highlights

Key Earnings Figures

The consolidated net rental income for 2024 amounted to EUR 11.6 million compared to EUR 14.6 million in 2023. This decline reflects operational challenges and vacancies, particularly in office properties, while retail assets contributed significantly to the revenue stream.

Investment Properties Overview

By the end of 2024, Baltic Horizon Fund's portfolio consisted of 12 income-generating investment properties with a fair value of EUR 241.2 million, down from EUR 250.4 million in 2023.

Commitment to Sustainability

As part of its social and environmental commitments, Baltic Horizon Fund achieved complete BREEAM certification across its assets in 2024. Furthermore, an impressive 98% of green leases were established, with aspirations to enhance this share in the coming years.

Financial Position and Outlook

By the close of 2024, the Fund reported a decrease in both its Net Asset Value (NAV) and Gross Asset Value (GAV). The NAV stood at EUR 98.1 million versus EUR 109.5 million in 2023, signaling an area for strategic focus moving forward. The management aims to enhance the Fund’s asset performance while optimizing operational costs to ensure resilience amidst market challenges.

Frequently Asked Questions

What are the key financial achievements of Baltic Horizon Fund in 2024?

The Fund achieved full portfolio certification, recorded a net rental income of EUR 11.6 million, and maintained an occupancy rate of 86.5%.

How does Baltic Horizon Fund plan to increase occupancy rates?

The Fund aims to implement flexible leasing strategies, rejuvenate tenant mixes, and enhance engagement through attractive offerings.

What strategies will the Fund adopt to manage its Loan-to-Value (LTV) ratio?

Baltic Horizon Fund plans to proactively dispose of non-core assets and repay portions of its existing debt to maintain an optimal LTV ratio.

How has the commercial real estate market impacted the Fund's strategy?

The management is focusing on sustainability and tenant adaptability amidst market challenges, with plans to invest more in in-demand segments.

Who can I contact for more information about Baltic Horizon Fund?

Inquiries can be directed to Tarmo Karotam, Fund Manager, at tarmo.karotam@nh-cap.com.

About The Author

Dedicated Author and financial expert Logan Wright here, 29 years old. After earning an economics degree, I spent a number of years working in different financial industries. My great passion is enabling everyone, from any background or experience level, to understand and be literate in financial matters.

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