Baltic Horizon Fund (NHCBHFFT) Q3 2024 earnings summary

Executive summary

• Strategy centers on centrally located, modern, sustainable assets with long-term governmental and social tenants, aiming for stable income, high occupancy, and diversification across tenants, segments, and geographies.

• Portfolio transition ongoing, with major tenant changes, active leasing, and a shift to the 'Modern City Life' concept targeting over 90% occupancy by end of 2024 and 96%+ in H1 2025.

• Recent quarters have been challenging, with net losses mainly due to property revaluations and vacancies, but progress is being made in leasing, occupancy, and sustainability initiatives.

• Major refinancing and equity raising efforts, including a €6.29m private placement and new loans, have strengthened the balance sheet.

• Sustainability focus includes 100% BREEAM certification, green energy initiatives, and a 3-star GRESB rating.

Financial highlights

• Net rental income for Q1–Q3 2024 was €8.9m, down 13.5% year-over-year, with Q3 2024 net rental income at €2.89m and rental income at €3.69m.

• Q1–Q3 2024 net loss was €13.4m, mainly due to €12.5m property valuation losses.

• NOI has averaged about €1m per quarter, with shortfalls due to tenant changes and refurbishments.

• LTV increased to 60.9% as of Q3 2024, with a short-term goal to reduce to 55% and a long-term target of 50%.

• Average cost of debt is 6.3–6.4%, with a goal to reduce it below 6%.

Outlook and guidance

• Targeting occupancy of 90%+ by year-end 2024 and 96%+ in H1 2025, with NOI expected to increase as new tenants move in and refurbishments complete.

• Plans include further refinancing, asset disposals, and a focus on social tenants.

• DSCR goal of 1.2+ by 2025 through increased NOI and reduced debt.

• Maintenance CapEx for next year estimated at around €1m.

• Continued investment in sustainability and green energy, with solar plants to supply all Lithuanian and Latvian assets from Q1 2025.