Performance of REDSIDE funds in March 2023

Monthly reporting of REDSIDE funds for the period 3/2023

NOVA Real Estate

In March 2023, the appreciation of the NOVA Real Estate fund reached a value of 0.28%.

In the area of asset management, we successfully negotiated the extension of leases with two tenants in the DIY segment, until 2029 and 2031. This ensured long-term stability from these properties and thus increased their value. The total area of these tenants exceeds fourteen thousand square meters. In addition, two business units were leased as part of Penny Markets in Jevíček and Strážnice with a total size of 198 square meters.

In the Trenčín industrial park, the construction of the expansion of the parking areas has started. These 118 additional parking spaces will serve our tenants within the premises. The construction brings a double benefit. This is a direct increase in income, as these places will be charged for, and at the same time, in the long term, it increases the competitiveness of our hall, which is aimed at tenants from the production segments, who bring with them a higher relative number of workers, and therefore demands for the number of parking spaces near the production hall.

Report NOVA Real Estate

NOVA Green Energy Sub-Fund 1

The appreciation of Sub-Fund 1 in March 2023 was 0.39% and for 2023 it reached 1.18% YTD. 

In the Krnča biomass heating plant, Subfund 1 continues to take steps for financial and operational stabilization. The Slovak decree set the ceiling of purchase prices for electricity from biomass for the year 2023 at 232 EUR/MWh, which fortunately did not give another negative signal to the sector.

We believe that, in the long term, the price ratios of wood chips and electricity will level out and these types of heating plants will continue to be profitable. Although the issued government measure did not thwart the production of electricity from biomass, the current market setting of wood chip and electricity prices currently offers the possibility of only partial coverage of input prices, and Subfund 1 is therefore considering various options for the continued operation of the heating plant this year, including temporary shutdown/conservation. Despite the slight drop in the price of wood chips, the state of operation is unflattering, as the spot prices of electricity on the exchange have fallen significantly over the past few months.

The projects of two biomass heating plants, whose secured claims are also the assets of Subfund 1, face 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. A proposal for a payment order was filed in Austria in the matter of the recovery of receivables from the title of these two heating plants, and preparations are beginning for the initiation of court proceedings.

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 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 website of Subfund 1 in the section "FAQ - "Side pocket".

Report NOVA Green Energy podfond 1

NOVA Green Energy Sub-Fund 2

The appreciation of Sub-Fund 2 in March 2023 was 0.71% and for 2023 it reached 1.82% YTD.

Also in March, work continued on the development of several PV plants, especially in the Czech and Slovak Republics.

We received studies for 12 roof installations on the roofs of buildings owned by sister fund NOVA Real Estate. These studies show that these 12 roofs could be equipped with photovoltaic power plants with an output of up to 3 MWp. For investment in these PV plants, we are considering investment subsidy support from a subsidy program of the MFŽP or MPO. The rest of the applications for the connection of factories to the distribution network are being submitted, discussions are currently underway with tenants about the buyout, or sale of electricity at the place of production/installation of PV plants.

In the pilot project of the rooftop PV plant Orlice, according to the contract for the construction of the PV plant for 2 sampling points, we started the actual installation of the structures on the roof. In 2021, the Slovak legislative framework enabled power plants from renewable sources to extend the feed-in tariff by 5 years with a simultaneous reduction in the purchase price, when this purchase price is affected, among other things, by the amount of repair costs for individual PV plants between 2022 and 2026 - i.e. that with lower than planned repair costs, there could be a slight reduction in purchase prices. For this reason as well, and due to the wear of the inverters at some PV plants in Slovakia and the impossibility of further repairing them, we have started the first stage of repowering consisting in the replacement of the inverters themselves. Due to the specific technical parameters at several Slovak PV plants, together with the replacement of the inverters, it is also necessary to replace the transformers and some other devices and cabling. However, even so, the replacement should only last for a few days, and a major impact on the production of electricity from these PV plants cannot be assumed. Inverter replacements are typical for PV plants (it is one of the few components that must be replaced during the PV plant's lifetime) and were foreseen in the financial plans. These exchanges also take place roughly according to earlier time estimates. 

Report NOVA Green Energy podfond 2