Performance of REDSIDE funds in October 2023

Monthly reporting of REDSIDE funds for the period 10/2023

NOVA Real Estate

In October 2023, the NOVA Real Estate Fund appreciated 1.11%, bringing the year-to-date total appreciation to 3.48%.

The performance in the past month was positively impacted by the transaction - the sale of the largest portfolio asset and one of the largest production halls in Slovakia ever - an industrial park in Trencin with a leasable area capacity of 120,000 m², which the Fund owns since 2020. The available funds from the sale of the property were used to repay mezzanine financing held directly by the Fund.

The positive performance was confirmed by the external valuation of this largest asset of the Fund, where the Fund booked the property and therefore the net asset value.

In the rental business, negotiations were successfully completed for the extension of one of the most significant leases in the property portfolio. The lease of the Victoria Vyšehrad building will be continued on a long-term basis by Eurowag, which leases the entire building.

Colliers, as the external independent valuer, has commenced work on the regular annual valuation of the portfolio.

The results will be known and posted during the last calendar month. Discussions are continuing with the strategic investor who is conducting due diligence on the Fund's portfolio.

Report NOVA Real Estate

NOVA Green Energy

In October, work continued on the development of several PV plants, mainly in the Czech and Slovak Republics, and we expect them to be completed by the end of this year. We are considering investment subsidy support for these PV plants from a subsidy programme of the Ministry of the Environment 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, among other things in the subsidies provided, including support for RES. As we have previously reported, the level of operating support for RES is ultimately unchanged. However, there have been other changes as part of the consolidation package, with the one relevant to the value of the fund's assets being an increase in corporate tax from 19% to 21%. This change was reflected in the valuation of assets this month, which also explains the underperformance of Sub-Fund 2 for October.

The inverters of the remaining two power plants in Slovakia are currently being replaced and we expect a significant increase in the efficiency of these PV plants in the coming years. The valuation of Sub-Fund 2 in October 2023 was 0.19% and reached 4.56% YTD for 2023.

In accordance with the current Sub-Fund 1 Articles of Association effective from 1 September 2023, the frequency of the announcement of the value of the investment share has been changed, whereby the values will be announced semi-annually on 30 June and 31 December each year in view of the liquidation of Sub-Fund 1.

We are also intensively focusing on the remaining two main asset groups of Subfund 1, namely biomass thermal power plants in Slovakia. In view of the economically unprofitable operation of the biomass power plants, where the costs of electricity production from biomass significantly exceed the revenues from its sale, production was curtailed during the year and at the same time bankruptcy and subsequent sale of this resource in Krnč was initiated. In the TeHo matter, we are evaluating published reports regarding the enforcement of liens by the Natland group, which took over JT Bank's position.

NOVA Green Energy