Performance of REDSIDE funds in September 2023

Monthly reporting of REDSIDE funds for the period 9/2023

NOVA Real Estate

In the month of September, there was a slight decrease in NAV, which is due to the concurrence of two factors – the month-on-month weakening of the CZK against the EUR and an increase in costs due to higher interest on mezzanine financing.

However, in response to the gradual increase in interest rates, the Fund continued to further reduce debt. After the recent very successful sale of the Baumax hobby market, we proceeded to sell the largest portfolio asset and one of the largest production halls in Slovakia ever – an industrial park in Trenčín with a leasable area capacity of more than 120,000 m², which the fund owned since 2020.

The transaction, which lasted less than half a year and was closed during the month of October, confirmed the internal valuation of this property, which was valued by an external independent appraiser. This transaction will have an impact on performance in the month of October 2023. 

Report NOVA Real Estate

NOVA Green Energy

In September, 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 program of the Ministry of 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 PV generation/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. In early October, the Chamber of Deputies approved the final form of this package. As we have previously reported, according to gradually emerging information, it was likely that subsidies would not be cut. The approved form of the consolidation package fulfilled these assumptions, so the amount of operating support for RES will be unchanged. The consolidation package only adjusted who will pay these operating subsidies. In 2023, the full amount of the subsidy is paid by the state; for the next years, the system returns to a system where the operating support will be covered by a combination of payments from final and industrial consumers and the state budget.

In September, the replacement of inverters at two other Slovak PV plants began, and the replacement will be similar to the replacement already carried out in May/June this year. Replacement of all components should be completed in October, and in the second half of October the plants will be put into trial operation with the replaced inverters and transformers. We expect a significant increase in the efficiency of these PV plants in the coming years. The valuation of Sub-Fund 2 was 0.31% in September 2023 and reached 4.36% YTD.

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 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 - the biomass heating plants TeHo and Krnča. In view of the economically unprofitable operation of the biomass power plants, where the costs of generating electricity from biomass significantly exceed the proceeds from its sale, production was curtailed during the year and preparations are underway to enter bankruptcy and subsequently sell this resource in Krnča. In the TeHo matter, we are evaluating published reports regarding the exercise of liens by the Natland group, which has taken over J&T Bank's position.

NOVA Green Energy