Monthly reporting of REDSIDE funds for the period 7/2023
In July 2023, the NOVA Real Estate Fund's appreciation reached 0,27%, and year-to-date performance is 2.37%.
As at 00:00 on 28 July 2023, the issuance and redemption of investment shares issued by the Company to the Sub-Fund was suspended to protect the rights and legally protected interests of the Company's shareholders. The period for which the issuance and redemption of Investment Shares is suspended is 6 months, i.e. until 28 January 2024. The suspension also applies to Investment Shares for which the issuance or redemption has been requested before 28 July 2023 and which have not yet been redeemed.
In July, we already know the development of footfall and turnover of the Orlice Park Shopping Centre for the first half of the year. In terms of footfall, the centre recorded a slight increase of 2.1% compared to 2022. In terms of sales, we recorded a slight decrease of ~3%.
As of the end of July, there is no change in the lease rate of the portfolio, which remains 99.5% leased, of which Retail is 99.8% leased, offices are 97.1% leased and the industrial hall in Trencin is full.
The appreciation of Sub-Fund 1 in June 2023 was 0.32% and for 2023 it reached 2.16% YTD.
In the Krnča biomass heating plant, Subfund 1 continues to take steps for financial and operational
stabilization.
However, the current market setting of wood chip and electricity prices currently offers the possibility of only partial coverage of input prices. The price ratio of wood chips and electricity is still unfavorable, and Subfund 1 has therefore decided for the moment to temporarily shut down/conserve the heating plant. The heating plant will be put into operation again when there is a long-term stabilization of the price ratio of electricity, heat and wood chips.
The projects of two biomass heating plants, whose secured claims are also the assets of Subfund 1, fac similar price-operational problems as the Krnča heating plant. However, here as well as the current management, we believe in the long-term perspective of the heating plants. In the matter of the recovery of receivables from the title of these two heating plants, a proposal for a payment order was submitted in Austria, preparations for the initiation of court proceedings are beginning, and the date of the first hearing was set for October 2023.
With effect from 1 August 2022, Sub-fund 1 does not formally plan, with regard to the gradual termination of activity, further investments in new resources. On the other hand, it focuses on the management and optimization of the assets falling into the "Side Pocket", with the aim of eliminating all risks and transferring these assets to Subfund 2. We have published detailed information in the form of questions and answers regarding the fund distribution project on the pages of Subfund 1 in the "FAQ - "Side pocket" section.
The valuation of Sub-Fund 2 in July 2023 was 0.44% and reached 3.65% YTD for 2023.
In July, work continued on the development of several PV plants mainly in the Czech and Slovak Republics. For investment in these PV plants we are considering investment subsidy support from a subsidy programme of the Ministry of Environment and Science or the Ministry of Industry and Trade. The remaining applications for connection of the plants to the distribution network are being submitted, discussions are currently underway with tenants on the purchase or sale of electricity at the site of the PV plant production/installation, and the first applications for building permits are being submitted.
In May 2023, an austerity package was introduced by the government with the aim of saving government expenditure, inter alia on subsidies provided, including support for RES. Since the introduction, no further specific parameters are known until today, so it is not possible to assess the impact on the assets of the Czech Fund. However, analyses and some information from the government have been published which suggest that subsidies might not be cut, but rather that there could be a change in the financing of RES, whereby payments between small consumers and large industrial customers, who previously paid a lower renewable charge than small consumers, would be aligned compared to the situation before the energy crisis. At the same time, the MIT is considering using resources from the sale of emission allowances to reimburse RES subsidies. However, due to the deadline for the approval of the state budget for 2024, it should be clear by September or October at the latest how the consolidation package will affect RES subsidies and then it will be possible to make a more informed estimate of the potential impact on asset values.
In Slovakia, we have completed the replacement of inverters and accessories at one PV plant, which will make production more efficient during the main lighting season. The replacement itself took place "on the fly", and non-production was reduced to a minimum number of hours. A similar replacement of inverters at two other Slovak PV plants is already planned for the end of summer/beginning of autumn, when the replacement will be carried out in a similar way to the already carried out replacement, i.e. during operation with only minimal downtime and therefore minimized non-production.
