Frequently asked questions from investors
On this page, we have listed some of the frequently asked questions from new investors.
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Baltic Horizon Fund is a real estate investment fund and follows the principles of Real Estate Investment Trusts. What is a REIT?
A Real Estate Investment Trust (REIT) is a company that buys, owns, operates, and sells income-generating real estate. REITs make money from their properties by renting, leasing, or selling them. As there is no REIT legislation in Estonia, Baltic Horizon Fund is not a REIT in legal terms but acts as a REIT-like vehicle following the same principles as REITs all over the world.
Which properties does Baltic Horizon own?
Baltic Horizon invests in commercial real estate such as shopping centers and office buildings located in the Baltic capitals. You can see the current portfolio here.
Is real estate a good investment for beginners and what are the pros and cons of investing in a real estate investment fund?
Investing in real estate is a long-term investment. First of all, you need to know that when you invest, there is a risk that you will lose money.
The main pros:
- Investing in a real estate investment fund enables you to invest in real estate without having to buy your own property, and it is completely up to you how much money you want to invest.
- The property is managed by a team of real estate specialists, so investors do not have to worry about repair costs, deal with tenants, or negotiate new loans with the bank.
- Most likely, the real estate investment fund will own several properties which means that the combined risk of real estate will be lower.
The main cons:
- Before investing in a real estate investment fund , you should study the strategy, the rules, the performance, etc of the fund and decide if the conditions and risks are acceptable to you.
- Real estate is a sector that is impacted by the economic development, including inflation and interest rates. You should consider these risk factors before deciding to invest.
- If you decide to sell at a particular moment, you may not get the price that you were hoping for.
How does Baltic Horizon work?
Baltic Horizon Fund buys, owns, operates, and sells commercial real estate objects located in the capital cities of the Baltic countries.
Baltic Horizon Fund was the first REIT-like fund to become listed on Nasdaq Baltic.
The investment strategy is to invest in properties with a stable income stream and a good chance of a medium-term capital gain, benefiting its investors.
Baltic Horizon Fund is managed by AIFM Northern Horizon Capital AS. Northern Horizon Capital AS receives a management fee and success fees for its management services.
How do I Invest in Baltic Horizon?
If you have a Securities account, you can place orders for:
- Baltic Horizon Fund units on Nasdaq Tallinn (ticket: NHCBHFFT). The fund units are traded in EUR.
- Baltic Horizon SDRs on Nasdaq Stockholm (ticket: NHCBHFFSDB). SDRs are Swedish Depositary Receipts with the underlying securities being Baltic Horizon Fund units. The SDRs are traded in SEK.
If you are investing for the first time, you need to set up a securities account before you can place orders. You can go through an accredited broker, such as your bank. When your account has been opened, you can make trades in funds, shares, and bonds.
What is the minimum investment requirement?
Anyone with a Securities account can invest in Baltic Horizon Fund, and you can start with just one unit. You can see the current unit price here.
What are the fees associated with Baltic Horizon Fund?
The management fee is linked to the market capitalization of the tradeable units. The management fee is calculated in tranches with rates from 1.5% to 0.5% from the market capitalization.
The success fee is based on Adjusted Funds From Operations (AFFO). The hurdle rate is 8% of AFFO from paid-in capital. The manager is entitled to 20% of the part exceeding the hurdle rate. The success fee is capped and floored at 0.4% from NAV per annum. Positive and negative success fee calculated annually accumulates perpetually.
What returns can I expect from Baltic Horizon?
The Fund aims to create long-term value from active asset management of its holdings. The total return depends on the particular moment that you buy and sell your units as well as the period of ownership. Each investment is subject to certain risks and there is a risk of losing the value of the invested capital. The recommended holding period for the fund units is at least 5 years. You can lookup unit prices on specific dates or over a time period here.
Is Baltic Horizon a liquid investment?
Baltic Horizon Fund units are actively traded. Fund units are traded on Nasdaq Tallinn, and Baltic Horizon SDRs are traded on Nasdaq Stockholm. See the latest trading prices here.
Past performance of the fund does not guarantee future returns. The value of investments may vary considerably in time, including substantial decrease. Before investing, you should familiarize yourself with Baltic Horizon Fund rules, latest prospectuses, strategy, and assets. We also encourage you to consult with a professional investment, financial or legal advisor before making an investment decision.