The Management Board of Northern Horizon Capital AS has approved the unaudited financial results of Baltic Horizon Fund (the Fund) for the full year of 2024, marking a significant step in the Fund’s strategic journey.
Strategic Direction and Key Achievements in 2024
In 2024, the Fund’s management team introduced key performance indicators (KPIs) to track progress toward its objectives, with an emphasis on improving transparency, accountability, and decision-making. This strategic shift is designed to ensure measurable progress toward the Fund’s goals.
The main objectives for the Fund in the coming years include:
- Achieving a portfolio occupancy rate of at least 95% by June 2025.
- Maintaining a Loan-to-Value (LTV) ratio of 50% or lower.
- Disposing of non-strategic assets over the next 18 months.
- Developing a clear Environmental, Social, and Governance (ESG) strategy alongside refurbishment plans to meet the portfolio’s Net Operating Income (NOI) potential of EUR 18 million by 2027.
- Retaining a 100% BREEAM or LEED certified portfolio.
- Securing at least a 4-star rating in the GRESB assessment.
As of December 2024, the Fund has made notable strides in the following areas:
- Successfully achieved 100% portfolio certification for sustainability.
- Analyzed its 3-star GRESB rating and has formulated a plan to achieve a 4-star rating in 2025.
- Achieved 86.5% occupancy, though short of the 90% target for 2024, based on lease signing dates.
- Launched a disposal strategy aimed at reducing the LTV ratio, with several disposals already underway, set to be completed later in 2025.
Looking ahead, the Fund’s strategy for 2025 remains focused on stabilizing its financial position and unlocking the full potential of its portfolio.
Leasing Performance in 2024
Despite the broader challenges in the real estate market, including increasing vacancies in the Baltic states, Baltic Horizon Fund demonstrated resilience through strong leasing activity. The Fund successfully renewed a significant number of leases and secured new tenants, including notable deals with:
- Narbutas at Meraki (3,200 sq. m)
- Apollo Group at Coca-Cola Plaza (2,200 sq. m)
- International School of Riga at S27 (3,680 sq. m)
- My Fitness and Expo Group at Galerija Centrs (2,000 sq. m each)
In total, the Fund signed new leases for 22,743 sq. m, generating EUR 2.95 million in annual rental income. Additionally, the Fund welcomed 61 new tenants, with 69 existing tenants extending their agreements.
By the end of December 2024, the occupancy rate of the Fund’s portfolio increased to 82.1%, with occupancy exceeding 86% when considering the lease signing dates. The signed leases will be delivered to tenants in 2025, further boosting the portfolio’s occupancy.
Looking Ahead: Stable Leasing and Strategic Goals
The Fund has also focused on extending lease terms to manage future expirations efficiently. With less than 20% of leases set to expire in 2025 and the majority expiring in 2026 or later, the Fund is on track to spread lease expirations evenly over the coming years.
Additionally, the weighted average unexpired lease term until the first break option increased to 3.3 years by the end of December 2024, up from 2.9 years at the end of 2023, indicating stability and predictability in leasing activity.
Conclusion
Baltic Horizon Fund is on a solid trajectory, meeting many of its strategic objectives and positioning itself for continued growth. With a focus on maintaining a high occupancy rate, optimizing the portfolio, and aligning with sustainability targets, the Fund is well-equipped to achieve its long-term goals in the evolving Baltic real estate market.
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