Good afternoon. This is Tarmo Karotam, Fund Manager of Baltic Horizon Fund. Welcome to the third quarter results overview webinar. As usual, you know, I would like to give a presentation of about 40-45 minutes and then reserve time for some questions. We have already received quite a few questions that I will try to answer during the presentation. In case something remains still unanswered then, please share your question in the question box. Let's kick this off. Let's get right into it.
So just a general introduction, Baltic Horizon Fund, being listed in Tallinn and Stockholm Stock Exchange in 2016 is a commercial real estate fund focusing on capital cities of the Baltic States and commercial properties. So far our focus has been on office and retail properties in the capital cities. We have also now diversified our strategy now to other segments such as logistics, aged care and light manufacturing if suitable objects come along. I think some movements there can be expected in the upcoming quarters for Baltic Horizon Fund as well. Overall, we...
Our number one priority is to be a recurring and consistent dividend payer from paying out the rental income proceeds from operations to our investors on a quarterly basis. We have about 150,000 sq m of lettable area in the Baltic capitals. As well, a mix of investor base from the Baltics and the Nordics mainly. We have a Standard & Poor's rating since 2018 on the fund and on the bond to be at BBB+ level. That has remained stable over the years. Now, getting into the results of the fund.
It's, I think very straightforward and understandable that, you know, the COVID period has not been that easy for Baltic Horizon Fund due to the centrally located shopping centers that we have in our fund, comprising of about one third, slightly more of our assets. Because of the severe lockdowns that we have witnessed also last year and then the more severe lockdown also this year, beginning of this year, our results have been directly impacted. The government makes a decree that everything has to be closed then, and the tenants don't have revenues, then it's very hard to extract any rent from there.
I have to say that our teams have done as good of a job as possible to you know keep the relations with the tenants and manage the discounts or deferrals of the payments. However, because of the lockdowns, our results have been affected, and in terms of net rental income for the portfolio, in 2020 the first nine months, we achieved over EUR 15 million of net rental income this year because of the longer lockdowns.
We have achieved a bit lower rental income of EUR 13.2 million, and this is mainly to do with the discounts that we have been forced to give to the tenants and also additional vacancy that is around 20% in Galerija Centrs and Europa at this point. I will get back to that a bit later. It has of course been a major challenge for us, you know, when the practical life, you know, when shopping centers are forced to be closed, then there's a lot of communication that has been happening between the shopping center tenants and us to find the best ways forward.
I think many tenants are increasingly optimistic and have sort of stayed as a long-term tenants at our properties. Attracting new tenants is still a bit difficult because again, we have a lockdown in Latvia. I've heard just today that the government is still very much interested to open the life of the city and so it will finish by Monday when restrictions will be eased and the shopping centers will be allowed to open during the weekdays. As well, the shopping center owners are promised, and not only us, but the tenants some remuneration for the lockdown.
We did receive around EUR 440,000 for the lockdown, some compensation for the beginning of the year. Of course, that's not matching the losses that we have had to encounter during the beginning of the year. Of course, yes, this is not very pleasant for us as this crisis in that sense is quite interesting that it has affected the city center properties rather than anything else. Where the major concentration of people you know were and also the tourists. Every crisis is a bit different.
Now, I think there's been a few questions on what do we see in the future, and how quickly and what sort of recovery can we expect. First of all, to address the evaluations in a maybe more elaborate way, we have you know had to accept a devaluation about EUR 40 million over the past year and a half. There's a few reasons for that. I'd like to just explain that maybe in more detail. First of all, it is because you know the shopping centers have been closed, and recovery of the shopping centers in the eyes of valuators has always been more conservative.
Because of the uncertainty on the income and how long these lockdowns will be, the sort of intermediate valuations have been lowered. The majority of the devaluations have come from mainly Galerija and Europa. Also, since we have a few refurbishment projects in Europa and also Meraki office building development, the valuators, because of again, uncertainty on the income side, have remained conservative and rather book these properties at lower end levels. What we can expect is first of all, to understand that lockdowns are not recurring anymore for the shopping centers especially.
It's good to see, at least in Estonia, that the rhetoric and the discussion at the government level is, you know, not very much focused on shopping centers anymore because they probably have more data to understand that the places where it really spreads is somewhere else. Shopping centers being large structures where, you know, people visiting can be managed. Everyone wearing masks, so it's not the place where the virus is spreading the most. The more specific, you know, the governments can be in that regard, so the better it is.
This is also what the tenants have now understood is that the lockdowns are not likely to be recurring. Hopefully also the one in Latvia was last, and it was a short one, and it will have some remuneration. That would give definitely and already is giving positive movements in the tenants head and saying that, you know, the life needs to continue.
Coming back to the NAV and you know, where it used to be and also the market price, you know, they're following quite similar terms then, in order to come back to the EUR 1.4 NAV and also the price on stock market. I think two things need to be happening. First of all, you know, the lockdowns need to end and that we can start signing up tenants at a more faster pace, and filling our vacancies, to show, you know, the valuators that, you know, reality is that everything is improving as well on paper.
There's many tenants that you know we have in the pipeline, but they're being hesitant to still sign the prolongations. Definitely the refurbishment projects that we have need to start producing income. That's one thing. If for example we add EUR 40 million back now to the valuations that we've lost, then we would be around EUR 1.4 of the NAV. The other thing is, of course, dividends. We fully understand that Baltic Horizon has been viewed for most you know as a dividend paying entity. It's always been a very difficult decision you know over the past 1.5 years what sort of the dividend it should be.
You know, given the uncertainty around you know valuations and the future and the you know the lockdowns, when are they coming again, and on the vacancies, especially in the shopping center side. We have been conservative on paying out dividends, but we still definitely have not stopped the dividends and but reduced the payout. In terms of the cash flow from operations, fund has remained very positive from the portfolio because again, it's this 15 cash flow generating assets. We have for office segment, which has remained, I would say very strong, showing even some increases and also neighborhood supermarkets. But yes, majority of the losses have come from the city center properties.
Going forward, in regards to net rental income, we saw a recovery and in Q3 and of course the worst quarter for us during the COVID lockdown period, you know, beginning of the year was Q1, where most of the discounts had to be addressed. You know, we still achieved a more than EUR 4 million net rental income from the portfolio. Compared to the peak in Q1, you know, that was approximately EUR 2 million below what should have been, you know, in normal circumstances. We've seen a gradual recovery. We don't expect Q4 to be affected as much as, you know, we had in Q1.
I think Q4 will be a little bit similar to Q3, but that remains to be seen because of the one-month lockdown in Latvia. I think it's really safe to say from my eyes as well that you know this Q1 was the bottom and I'd say the first half of the year was the bottom of the crisis for us. Again you know it's very much related to lockdowns for us and the sort of upward and positive forward-looking trend of our shopping center tenants. In regards to trade receivables in September it's just a normality because we had CBRE as our new property management partner onboarded.
It is basically a technical glitch in that sense that in real life, tenants are paying end invoices quite well. You know, the only discussions that we have right now is again in Latvia. As tenants are also promised some support, then we will see, you know, how much that actually affects our results in Q4 later on this quarter. Some of the key events you know for the fund just to highlight you know we've been keeping very busy during this lockdown periods and you know a lot of work has been done to make sure that we report you know everything that is going on in our portfolio in a very open manner.
It is unfortunate that, you know, the valuations have been affected. You know, we have reported that in full detail. I think I hope that that has been appreciated by the investors and it has been appreciated by the European Public Real Estate Association two years in a row. We're really happy about that and planning to keep on, you know, providing our investors very detailed reports. In regards to our office buildings being green and we've worked on achieving BREEAM certification for all of our office buildings. By now we have achieved, I think, for all of them, which was a target for this year.
We can say our office portfolio is fully BREEAM certified. In regards to our future plans, which I will discuss a bit later, you know, it's quite difficult to, you know, stand still during the crisis years. Crisis years is exactly when one needs to operate and, you know, prepare for the next upcycle. I think that's what we've been doing in Europa's case, changing the concept and but also planning, you know, the expansion of Costa Vaio and adding some office premises there and making that a real long-term success. Also, you know, the office building Meraki completion and all of that requires capital.
We've had you know extensive discussions how to you know extract capital and you know turn around some of the investments and either use you know proceeds from sales or properties or bond or the new equity. These are the things that we are really exploring in detail and as well they are very tough discussions. I'll come back to that a bit later. I like this slide because in a way it shows you know very directly you know the footfall and turnovers of our shopping centers during the lockdowns.
It also shows how severe the lockdown during the first four, five months of this year was, which directly affected our rental income. But it's also very clear that once the restrictions are lifted, the recovery of both footfall and turnover is coming back almost instantly. I think, you know, we are achieving more than 60% of the pre-COVID levels. What's interesting to see is that the turnovers are definitely already at around 70% because, you know, people are visiting less but buying more. You know, hopefully after October and November, December will be a very important month for us, you know, whether the shopping centers allowed to remain open. Because during Christmastime everybody will shop.
It's just something, you know, everybody does. If the shopping centers are allowed to be open, not like last year, when November already and December brought the lockdown. We hope to, you know, continue this trend. I think to achieve 100% will also mean that, you know, the tourism has to come back, so that will hopefully happen next year. Again, I think this slide shows how severe the lockdown was and hopefully that will be the last such a long lockdown as can be seen already today as well in Latvia that it was only four weeks, and that helped very much.
Some of the figures that we're also monitoring is the vaccination and that has improved and getting closer to the targets. What we can see of course in the Nordics is that when you have quite a high level of vaccination and people are monitoring their health that you know life is really back to normal. It's quite, I think, quite interesting to see this case because we know where we can be as well, that people being you know more prudent and making sure that you know if they're sick, regardless if they're vaccinated or not, then they stay away.
I think it's already today you can see that the waves that we've had, you know, in the Baltic States are now, you know, coming down, showing positive trends. Hopefully that will continue and you know, the Christmas shopping can happen. I think it's very key for us as a fund to see that. You know, overall, aside from the lockdowns and you know, places being forced to close, which has hampered the businesses, the actual you know, growth of the economies have continued quite strongly. It's not only because it's a low base, but it's because you know, the unemployment has decreased and is getting to very low levels.
It's because of other sectors, you know, are doing very well and, you know, the Baltic states are open economies and quite diversified. What's been majorly impacted is of course tourism, you know, very severely. Hopefully that will come back as well, you know, fueling the economy even more. What's, I think, a very interesting slide, again, what also the tenants, shopping center tenants cannot overlook is what the trends are in retail trade. You know, it is clear that, you know, people are also shopping more online, but it's also very clear that for the tenants, it's all about the omni-channel shopping in the future.
Because you know what is clear is that around 80%-90% of the turnover is still done in traditional shopping centers. I think that will stabilize around 80%-85% in the Baltics. Because you know we are still smaller cities where shopping is 15 minutes away. But anyway the trends you know following the increases in economy and salaries for example is definitely fueling retail trade. As well we can see it from the increase in deposits and people are ready to spend. They've been saving up. I think you know we have definitely positive outlook on our retail segment going forward but you know the lockdowns just have to stop.
Going more into the portfolio performance, it is the retail as part of rental income has decreased because of again the discounts, but we expect this to start coming back. There's some new changes in our you know tenant mix. As you know, the G4S property was sold, and I'll get back to that later. Otherwise, there's no major changes in our anchor tenants at this point of time. Major focus is on shopping center prolongations of smaller tenants. Overall, just I think our team has done a great job considering the circumstances.
We are feeling that actually at the moment with a tenant that is expanding in the office building. So I think it's also quite safe to say that in the office segment, you know, there are like usual tenants that are expanding, tenants that are, you know, keeping still and finding efficiencies, but also some tenants are looking, you know, to decrease. So I think it was quite similar with pre-COVID, but maybe the only difference is that, you know, the layouts and the type of work, you know, that has to adapt the interior design and, you know, how work is being done.
You know, it's definitely a more flexible world, but people still come together in offices for group work and that needs to be addressed by tenants mainly. Just a few words. You know, this is something very active, you know, since September this year and it's been quite a major project. In Europa we have really turned this concept around and it's I think a very good time to do it, because some of the, you know, many leases are ending and we have ended some of the leases ourselves, because of the situation.
We have great interior, you know, architects on board from Finland, Polder and I think, you know, the end results will be very attractive and it will be addressing the environment, you know, the city center of Vilnius which has been growing and when tenants, you know, are and people are back in the offices and more residential is being, you know, developed in the neighborhoods then, and it will be a very attractive location. We aim to open it already end of this year. As far as I know that we have I think half of the operators already signed up.
I think that's great news for us to see that food operators are also seeing very positively the future. We've signed up a few also new tenants in the other areas. As you can see also in the table, the pipeline, the discussions that we have with tenants, is a real number, you know, and it's quite large. In terms of, you know, actually signing up new leases, it's still not that easy. We've done also several prolongations.
I think it's also good to note, from what I see is that retail, and it's not only for Baltic Horizon, retail centers in the Baltic States will move more towards turnover rent basis, rental agreements, having a fixed minimum. Definitely the turnover part in many leases will be the reality. I think this is really an opportunity because, you know, when trades are coming back and people start shopping again. There's all many reasons why to expect that, you know. As discussed before, then this is definitely a positive sign for the landlords as well.
You know, one thing we're definitely not doing is, you know, there's been questions about how long-term are our, you know, discounts. Something what we're definitely not doing is signing up, let's say five, 10-year leases now during very tough times with some of these tenants at very low minimum rentals. If we are signing at something at a lower fixed rate, then there will always be a turnover component, you know, potentially allowing us to exceed any expectations that we have when the lockdowns are over. Meraki development, first tower, and these are the, you know, most recent pictures. As you can see, Domus Pro complex is right next to it.
I truly believe this will, you know, at some point, become a very nice mixed use complex. You know, as it has healthcare, it has swimming pool, it has pet store, it has restaurants, food stores, it has offices, tile shop, you know, shoe store. It's a good sort of very convenient complex. Finally, we have also the facades mounted, and that has definitely given us, you know, more leverage in negotiations with the tenants. We're finally able to, you know, bring tenants to the building and then there's several negotiations ongoing.
We haven't yet secured an anchor tenant, a large anchor tenant, but the market is definitely moving, so it's major effort on finding the tenant now that the building is almost finished. That, of course, will again contribute positively to the future valuations and our generated rental income from our portfolio. Now a few more words on the sales of the G4S building. We weren't really planning to sell it, but we had you know the buyer approach us, you know, off-market and as it was quite a personal sort of project.
The developer approached us with quite attractive terms and, when we analyzed the future of the property after G4S is moving out and vacating half of the building, then conversion into a multi-tenant property would have been quite capital-intensive and, since the property for us, you know, it's a very unique architecturally built property, but it definitely wasn't as efficient as we would expect, you know, our portfolio to be going forward.
We decided to use the opportunity and exit from this property, you know, having the proceeds available now for reinvestment and we have one or two projects in the pipeline in office and logistics segment, but most definitely we have plans to move forward with the Westymia project so some of that can be invested into Westymia project to create additional value. You know, it is something that no company, no fund can overlook. It is the ESG goals. That's been a major focus for us over the past few years, and we're fine-tuning this and achieving already some milestones. You know, our office buildings have been BREEAM certified now.
Our lease agreements have had now green lease clauses, and that's also been a major, I think, effort. You know, we have more than 230 tenants. I think our tenants are very professional, institutional, so introducing those clauses has been quite successful. We have analyzed as well the solar panels. We have you know I think now three solar panels that have been mounted in our portfolios. Of course, electric vehicle charging stations. We're very much keeping an eye on our building so energy certificates and making sure that if we you know how can we achieve better results you know in an efficient manner.
If not, then, for example, in G4S's case, then to exit from the asset and invest proceeds into newer properties. You know, achieving GRESB four-star is definitely on our desktop as to-do list as well. Once again, you know, the view of our office properties, generally office properties are doing very well. We have prolonged, you know, the lease agreements that came due and we're continuing with that, working on vacancy in Lincona to lease it out to the current tenants, which is also in negotiations right now. Hopefully that will show positive results.
Overall, you know, and this is, of course, a long-term, more of a medium to long-term goal is to grow the property portfolio, you know, not only through expansions of our current properties, but to bring more diversification in also in other segments and, you know, achieve also acquisitions with long-term more longer-term rental agreements. It is so that 2021 and 2022 will be they are, you know, important years for the fund. You know, we are because of also some lease agreements, you know, coming to an end, which has affected also valuations that they're coming to an end, you know, this year and next year.
We plan to prolong them and really work on the weighted average lease term. You know, maybe selling 1 or 2 projects to free up capital to invest into a more long-term sustainable projects in nature. Yes, you know, really extracting the value from our centrally located assets, Europa, Postimaja. Galerija, we have plans as well on the fourth floor. Not yet able to you know show it to the market, but you know, there's some concept change also on the fourth floor with Food Hall and potentially new terraces and a new sports club.
In order to sort of focus also on numbers a bit, and this was addressed a bit earlier as well, we've tried to, you know, keep the admin expenses during the times quite stable and then work on the rental income. The major, you know, difference and the drop in rental income is because of, you know, shopping centers being closed, forced to be closed and, you know, the discounts we're forced to give to the tenants, you know, in order to secure long-term relationships and occupancies.
In regards to the valuations, you know, we've had a devaluation of EUR 40 million and, you know, the latest discussions also with market participants and valuators, you know, I'm quite positive that, you know, that should be really the bottom of it. When we can also start recognizing revenue for our expansion projects, that should definitely bring back some of the value. You know, lockdowns need to end and to regain that value that we can sign the leases that we want to sign and increase the occupancy that directly affects the valuations.
It's difficult to say, you know, what sort of valuations will be year-end, but I hope they will be stable, you know, showing some trend to the positive side. If one would ask, you know, how long it would take to get back to the previous levels, then I would estimate around a year after the lockdowns are over. We're very much working, you know, to show much better results, you know, during the next year.
That brings me to dividends and because we know that that's how the investors look at us and we, you know, I think we're quite appreciative of the investors remaining patient during these times and that the dividend reserve that we have accumulated. You know, there's a lot of questions about how and when we are starting to pay that out? In that sense, again, it's not an easy decision to make and I think overall we've definitely decided that we're on the recovery. That's why we have also increased the dividends based on the generated net cash flow to around 80% of Q3.
We're really, you know, planning to in case, you know, normal conditions continue, then to have these dividends at these levels or slightly improve them every quarter. You know, investors have asked me as well that why don't you guys pay out, you know, the whole distributable, the cash flow that has been retained, you know, during the COVID times? It's, it's in that sense, you know, I fully respect that, you know, this is something that the dividend, you know, the investors have earned and, you know, that should be paid out and we will be paying that out.
If to pay it out again in one time, in one quarter, for example, that would create a lot of volatility, you know, in our unit price, I think, but also attract a lot of speculators, you know, to start looking at that as a one-time option. It's something that we're definitely, you know, exploring and discussing, you know, on a regular basis, but I think it will rather be a more gradual payout than a one-time payout in the future. Again, we're discussing this and we're trying to hear what the investors are saying and make the decision based on that.
I think it's also safe to say that we will be aiming to increase the dividend from this point forward and do that in some I think attractive steps. One other thing just that it's very open to discuss with the investors is that, you know, we had quite a lot of acquisitions done in 2016 and 2017 and when we take a five-year loan then these loans become renewable. I'm quite happy that, you know, in 2020 we didn't need to, you know, during the lockdowns, address this at the same time.
Many of our loans, you know, Pirita and SKY, you know, we're already prolonging, but what happens in 2022? We have quite a few loans that needs to be prolonged. I'm happy to say that we have started this activity as early and received offers from our partner banks. I'm quite happy to see that they are, I would say, quite similar in terms that they were in the past, regardless of the fact that, you know, we have been having issues with the lockdown and for our shopping centers.
I'm quite bullish that we, you know, we can prolong the loans that are due in 2022 at quite similar levels. These are still yet to be negotiated, and we hope to give more. Well, definitely, there will be more news about that in the next webinar after the next quarter. Banking sector is definitely strong. You know, banks are lending and as well to the partners that they have. I think that is exactly around 45 minutes. If let me see if I can see some questions here.
The question on Meraki, and as I said, you know, we have a few leases there, which are in place, but we're still looking for the anchor tenant. There are negotiations ongoing and you know, business is quite a competitive scene. But I think we have a very great product there. It's high pressure on the brokers, CBRE, and we're working with Newsec and Colliers on the ground as well. Again, we hope now that you can see the property actually almost completed, that we can sign a anchor lease as soon as we can, and that will definitely impact positively the income of the portfolio. Question on Galerija Centrs and on prolongations.
You know, there was a chart here which showed that a lot of negotiations are ongoing on a pipeline. You know, we have signed up two new leases. We're also replanning the concept of the center. Certain prolongations have happened, but we expect that you know, there will be definitely new tenants coming, new anchor tenants coming to the property. It's yet too early to announce, but these negotiations are ongoing. It's definitely not that there's nobody knocking on the door. Everybody's trying to you know, now position themselves for the new upcycle after the lockdowns, all the tenants.
It's just active negotiations to find the best solutions. The question on Meraki and the financing and the bond. The bond was used to you know continue the construction of the first tower. Any potential fundraising that we have or might be planning is not dependent on that. We have the capital available to complete the property and lease it out to the tenants. There's a question on our cooperation agreement with EBRD.
Yes, this is a discussion we've had with EBRD for many years, you know, to bring them on board as one of the anchor investors. We have discussed, you know, of course, you know, how to align our strategies in terms of composition of the portfolio going forward. We have discussed also the investment size that they potentially can invest into our fund over long term. I could say maybe that this program is, I think, you know, understood by us as more of a long-term program.
Like, for example, you know, we're not raising, I don't know, EUR 50 million, you know, in one go from them or EUR 30 million or anything like that, but rather, you know, do it in smaller amounts and in case we really need the capital. You know, there's a lot of vacancy in the portfolio. We are thinking of course, as well to potentially maybe invest some of the cash that we have. We are doing that. In order to really, you know, extract the long-term value, for example, in Postimaja, we need additional equity. Mainly the potential fundraising plans are around that.
I know there's you know, the pluses and minuses for that. We also hope that you know, we can address any concerns in that case when the time comes. We haven't yet decided on the details of that. The question is on the bond issue of Narva part two. That's something that we can do, but it will be used for the second tower. If we're able to you know, fill the building with you know, tenants and when we think that it's time for the second tower to be built, then most likely we will address the second part.
It's not yet clear how, when to do it, but it depends, I think, on the market. You know, we could do it as early as you know, first half of next year. It's something that is an option for us and it's a great option for us to use, you know, to complete the project in full. Then there's, I think, a good question that, you know, knowing the pandemic and the COVID-19 and all of what's happened, would we buy Galerija Centrs again? I think the answer is definitely yes. Galerija Centrs is a legendary property and it. You know, no crisis is the same.
It's been very interesting also for me that, you know, this crisis has really affected really the centrally located properties rather than anything else. Not only in the Baltic states, but across the neighboring countries as well. I think, you know, especially in retail, but also in office to some extent, you know, people still like to, you know, be in the city center where the buzz is. Not all tenants, you know, want to be there, but you know, one thing good about the city centers is that first of all, if tourists come back, that's where they go. They don't go to the suburbs, you know. That's one thing. They will definitely shop, you know. They will
You know, tourists come to the destination not to shop online. It's definitely money being spent. The second thing is that you know, city center is always a destination for anybody. I think in the long term, again, these properties will prevail and they will have visitors that do spend money. You know, I think for us it's not to worry about how to get the people to the city center or but rather how to make them the best offering possible for them to spend the most amount of money and how to have the best tenant mix. That's something we really are trying to address in Europa now imminently but also in Galerija and Postimaja.
In Europa, you know, the target audience is the neighboring, you know, people that are working there, are living there, you know, spending time. The answer is definitely yes. We absolutely believe in some central locations going forward after the lockdowns. 2022 payout question. I think it's a very good question. I would say that what we are guiding is at least 80% of the generated net cash flow. Because we don't expect the lockdowns to continue, it's recovered from here and at least 80% of the generated net cash flow.
We know that, you know, when we did pay out the EUR 0.10, and I think that's something that all investors expect, EUR 0.10 per unit, then this is definitely a goal for us. I think, you know, after the lockdowns end, then you know, pre-COVID-19 times, we actually you know, generated net cash flow was around almost EUR 0.12. And the payout was more than EUR 0.10. You know, if we achieve the pre-COVID-19 levels and this is you know, this is somewhere where we aim to be, and hopefully that will already happen in 2022. We're definitely yes, thinking about acquiring new assets in and also logistics to further diversify our portfolio.
The question is on now hedging of the bank loans, and I think it's also a very good question. We've had every loan that we have taken, you know, over the years. We've had a major discussion on how much to what extent should we hedge it. The expectations on the EURIBOR to continue to rise or start rising, let's put it this way, has made us some decision not to hedge it in full, but especially lately, you know, in parts or to some extent. Now going forward when we are refinancing our loans, I'd say we're quite careful with the hedging.
Hedging is quite expensive and there's a lot of reasons, you know, why we don't expect, or the market doesn't expect EURIBOR to start rising that quickly. It really depends on the loan tenures. If it's a five-year loan, I think we look at it a bit differently when it's a two- or three-year prolongation. It's hard for me to give you a straight, you know, concrete answer. I would say we're rather careful of the hedging at this point. But definitely, you know, analyzing it case by case. Then the question is on private placement and that we are thinking of. And the question is why a private placement versus, you know, a public offering?
It's a very valid question, and there's a few let's say reasons for that. You know, first of all, the private placement can be done much more efficiently and much more quickly. You know, public offering, considering it just from practical point of view, it will take at least two, three or even four months to prepare, whereas private placement is something that o ne can execute quite quickly. In regards to all investors being able to participate, I think all interested investors can approach us and express their interest, you know, to participate. Then we can take this into consideration.
Other than that, you know, investors can always, you know, re-review their position in the stock market and. We're open to any, let's say, if somebody is interested in participating, then that's something that we can definitely discuss within the private placement planning phase. In regards to public offering, you know, it's something that can happen as well, you know, next time that we need equity for our projects ongoing. Yeah, it's something that we need to understand takes time and it's more costly. In regards to the private placement and the equity issue, you know, it's something that we are working on and there's no concrete, let's say amounts that we know yet.
It is legally up to 25 that is possible with the exemption for the private placement. I think the actual need is rather what we're targeting is 10, 15, around 15. Question on the elderly care homes. We are analyzing a few projects, but it's quite a risky investment today. I think right now. The market is still very immature and when making an investment in the aged care in the Baltics, it's quite a lot of tenant risk involved. We're still analyzing how to best approach it based on the experience we have in Nordics.
Again, the Nordics is a different market. We have identified a few very professional players and the negotiations are ongoing, prioritizing currently, I think logistics would be fair to say. In regards to the price of the private placement or any issue, you know, it's something that we have to consider as you know what we can do based on the fund rules. I think if anybody is, you know, interested in participating, that's something that we can discuss separately. Again, you know, we're exploring various sources for our capital needs.
You know, being bonds, being the cash that we are freeing up and new cash to be raised. It's a difficult discussion and sometimes because you know, actually investing at the right time can create a lot of shareholder value down the road and missing the opportunity you know, prolong the recovery of our fund's portfolio. So as well, I see a very good question that you know, to have more of a straightforward, let's say, promise to the investors in terms of a dividends being paid out. And I think this is something that we will definitely discuss more.
Considering just the uncertainty over the past few years, you know, it's been difficult to decide on the plan in January, you know, what dividends will be. Because I think something that we have clearly stated and that we stand by is, you know, in normal times, we want to pay, you know, out at least 80% of the generated cash flow. I think that gives a quite good roadmap for the investors. Actually pre-COVID times, we paid out 95% of the cash flow because we saw, you know, the fund was generating good cash. We had sufficient capital for our growth.
You know, it's something that potentially we could aim for also in the future. But we will think about that. I think it's a good comment, if in more stable years we could already you know have a very straightforward roadmap for the dividend for the entire year, for example. Very clear decision, but we'll think about that. A question on Postimaja expansion. In beginning of this year, we received the construction permit and then, you know, because of the supply-demand situation in the construction sector, you know, the first sort of view on the potential construction companies you know didn't really match ours.
At some point it got into, you know, when we went into more details then during, you know, spring, summer, construction companies even said that, you know, we're not able to even quote you, make you a quote. It was like almost, you know, going to a restaurant, ordering food, not knowing what you're gonna get and how much you need to pay for it. So we took a step back during the summer and with our new partner, CBRE, in property management and taking over the properties. We have reviewed as well the project and also looked for some potential savings.
We have also revisited the business plan, you know, what we now foresee for the future and want to make an internal decision about going forward during the next few weeks. I think when we have made the decision, you know, also understanding the finance, the sources of financing, then we will announce it to the market, like we did with the Europa's case. Very clearly, you know, what is the exact timeline and when it will be completed. I hope that we can announce something already in December, in Q4.
It's a strategic priority for our fund, you know, as we believe in our city center assets on a long-term basis and get them ready for the next upcycle after the lockdowns. That goes for Europa, for Postimaja, and for Galerija. Thank you very much for these questions and I hope this was informative presentation. Going forward, again, our number one concentration is on getting the new leases signed and prolonged and really get the NOI of our refurbishment projects, you know, from Meraki, from higher NOI from Europa, and filling in our vacancies and you know, as we have started to increase our dividend.
You know, I think we believe that in the upcoming quarters we'll start to show results and, you know, that we're able to recover from the valuation losses and uncertainties that we've had over the past two years. You know, real estate is long-term business and I think I fully appreciate, you know, our investor base to be resilient and patient with the fund and hopefully better times ahead. Definitely working on that. Thank you. Have a nice day.