Baltic Horizon Fund's 2024 Performance and Future Strategies
Overview of Baltic Horizon Fund's 2024 Performance
The Management Board of Northern Horizon Capital AS has approved the unaudited financial results of Baltic Horizon Fund for the fiscal year of 2024. These results demonstrated consistency with previous disclosures, highlighting the Fund's ongoing commitment to transparency and accountability.
Strategic Execution and Major Objectives
In 2024, Baltic Horizon's management team strategically opted to implement key performance indicators (KPIs) to better measure and assess their performance. Recognizing the need for clear benchmarks, the team focused on enhancing transparency in their operations, which is crucial for informed decision-making. As they look forward to 2025, the management has outlined the major objectives, including:
- Aiming for at least a 90% portfolio occupancy rate by 2025.
- Maintaining a loan-to-value (LTV) ratio of 50% or lower.
- Considering non-strategic asset disposals within the next year.
- Establishing clear environmental, social, and governance (ESG) strategies and refurbishment plans with a goal to achieve a net operating income (NOI) potential of €130/sq.m. by 2027.
Notable Achievements in 2024
As we reflect on 2024, several achievements stand out, underscoring Baltic Horizon's commitment to excellence:
- The Fund successfully placed 100% of its portfolio under BREEAM certification, showcasing its focus on sustainability.
- An analysis of the GRESB rating revealed a 3-star recognition. Although the rating fell short of expectations, the Fund has crafted a comprehensive action plan to achieve a 4-star rating in the following year.
- While the target of 90% portfolio occupancy wasn’t fully met by the end of 2024, significant progress was noted with an occupancy rate of 86.5% based on lease signing. Actual occupancy is predicted to increase as tenants finalize their moves.
- The recent disposal strategy has been introduced to lower LTV levels, with several processes already underway.
- Looking toward 2025, the Fund's management remains committed to a strong strategy that aims to stabilize its financial standing and optimize portfolio potential.
Financial Outlook
In 2025, the Fund plans to adapt to both tenant demands and market conditions with a focus on flexible and sustainable solutions. The primary goals include increasing portfolio occupancy rates and reducing the LTV ratio by repaying a portion of the issued bonds.
Financial Stability Initiatives
The management team has implemented proactive measures to enhance financial stability by reducing leverage, primarily through bond repayments, which aims to alleviate financial pressure and foster sustainable performance.
In line with its commitment to social and environmental responsibility, Baltic Horizon has achieved an impressive 98% green leasing rate across its portfolio, and anticipates further increases in the upcoming year.
To solidify its financial standing, the Fund aims to improve its debt service ratio and lower loan-to-value levels by optimizing occupancy rates and property concepts. Key priorities will include adaptive leasing strategies, property repositioning, and targeted investments in high-demand segments.
BREEAM Certification Success
In 2024, Baltic Horizon secured its first BREEAM Excellent certificate when the Meraki business center received final certification. The Fund plans to focus on renewing all relevant certifications in 2025 to maintain its commitment to sustainability.
GRESB Benchmarking Analysis
The Fund received a 3-star GRESB rating in 2024, slightly below the previous year's rating. While improvements were made in the management section, the performance section score decreased due to data limitations from sold properties. A GRESB improvement plan is underway aimed at achieving a 4-star rating next year.
Financial Highlights of 2024
For the year ending 2024, Baltic Horizon reported a net loss of €16.8 million compared to a loss of €23 million in 2023, significantly influenced by property valuation losses. The earnings per unit were negative at €0.13, an improvement from €0.19 in the previous year.
The consolidated net rental income decreased to €11.6 million from €14.6 million in 2023, influenced by the prior year’s income from sold properties. On an EPRA like-for-like basis, the income was down 11.8%, largely due to vacancies in office properties.
Investment Portfolio Overview
As of the end of 2024, the Baltic Horizon Fund included 12 cash-generating investment properties across the Baltic capitals, valued at €241.2 million, a decrease from the previous year’s €250.4 million. This change was attributable to modifications in exit yields and adjustments in the weighted average cost of capital (WACC).
During the year, approximately €6 million was invested in tenant fit-outs, indicated by a commitment to enhancing the quality of the investment portfolio.
Debt Management and Cash Flow Performance
The Fund's interest-bearing loans and bonds totaled €149 million by the end of 2024, a slight increase from €143.5 million a year earlier. Cash and cash equivalents rose to €10.1 million, ensuring liquidity for ongoing operations and investment opportunities.
Net rental income in 2024 contributed significantly to operational cash flows, although there were changes in cash flow due to asset sales and rising vacancy levels.
Looking Ahead
As we move forward, Baltic Horizon remains committed to its strategic goals, focusing on financial stability amidst a dynamic market landscape. The ongoing adaptation to sustainable practices and resilience will ensure the Fund's ability to meet its objectives and create long-term value for investors.
Frequently Asked Questions
What are the main goals set by Baltic Horizon for 2025?
The primary goals include achieving a 90% portfolio occupancy rate, reducing the loan-to-value ratio to 50% or lower, and focusing on sustainable strategies.
How did Baltic Horizon perform in terms of BREEAM certification?
In 2024, Baltic Horizon achieved 100% BREEAM certification across its portfolio, underlining its commitment to sustainability.
What financial challenge did Baltic Horizon face in 2024?
The Fund reported a net loss largely due to property valuation losses, which affected its overall earnings and financial performance.
How did Baltic Horizon plan to enhance its financial stability?
The Fund plans to improve its financial stability through proactive debt management strategies, including bond repayments and optimizing its rental income.
What initiatives are in place to improve GRESB ratings?
A GRESB improvement plan has been initiated, aiming for a 4-star rating next year by enhancing data collection and property performance metrics.
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