Hello, and welcome to the annual general meeting of Baltic Horizon Fund. My name is Tarmo Karotam. I will be hosting this meeting as the Chairman of the meeting, and Diana will be assisting me with minutes and perform secretary duties. Welcome, investors that are present, and welcome also investors who are online. We have today an informative meeting, and as nothing is put on the agenda for voting this time around, quorum will not be counted at this meeting. Also, thank you for attending this meeting in September. Usually, we have this meeting in June, and that's a regular time when we've had these annual meetings.
However, quite a lot of things have happened during the summer, so we thought that it is probably best to have this meeting now in September, where I think more information can be shared about the current situation of the fund as well as some of the future plans. As usual, welcome you to ask any questions. Usually, I see them at the end of the presentation. Let's start and kick this off with a traditional KPI overview. Here, on slide two, one can see the life of the fund in numbers, and these are what we have identified as key performance indicators. Gradually, throughout the quarters, we are making some progress with the occupancy, but it's a tough market. We'll get into that a bit later and it continues to be a tough market, still even seven, eight quarters later.
We are making, I think, generally good progress with the average rent level, being and trying to sustain that as much as possible. Of course, indexation helps, but as well, getting in the new tenants at attractive rental levels is not easy. Gradually, we are making progress. Also, our net operating income on a quarterly basis has been around €3 million on average. It has shown some positive signs in the last quarter as new tenants are moving in. However, we do have some tenants at the same time leaving the premises, so it is a dynamic environment that we're working in. Our LTV goal has been to reduce the loan levels, and over the quarters, we are showing, I think, the right direction, but it is moving quite slow, as we have our LTV goal set at around 50%.
Euribor is decreasing, so that is helping our cash flows to some extent, and average cost of debt is also gradually decreasing. However, we still have an expensive bond in our balance sheet that we are working to reduce, and these are what also the plans are all about in the coming periods. I think to note that from the cash flow perspective, we do have cash outflows which are, let's say, not part of the usual operating business, but they are investments into new tenants, into the properties that need repairs. That is one of the key elements that has kept our cash flows under pressure, as well as loan amortizations, but I will get into that a bit later. In this slide, we have tried to highlight, slide number three, sort of the key takeaways or the key messages that we have currently for the investment public.
We have always set an ambitious goal, and several years ago, when our occupancy of the portfolio was below even 80%, say, in the middle of 2023, around 76%, 77%, to achieve what we call a more stable occupancy of 90%. We have signed a lot of new leases, but there are tenants whose lease agreements are terminating. Tenants renegotiate their space that they need, especially in the office segment downwards. In the retail segment, the retail spending and consumer confidence still remains quite challenging. It has been more difficult to achieve the 90% target despite showing some gradual progress. We will continue to work on that. We had a decision this time around, also, it was part of the cost-cutting exercise that we continuously have gone through.
We thought that it's probably more reasonable to do the valuations at year-end when we have also a lot of tenant situations in the buildings concluded, and that especially was in regards to the Latvian State Forestry lease expiry and prolongation, as well as many other tenant movements, especially in Europa Center and S27 office building as well. The investment market in the Baltics, as many know, is quite illiquid. Not many transactions are happening. The buyers and the sellers are still apart from their expectations, and many hold onto their properties as much as they can and wait for better times before selling them.
We made an announcement at the beginning of the year that we would be looking for a buyer for Postimaja and Coca-Cola Plaza Complex, which is just behind us here, just to test the market and see if there are any attractive buyers for the core assets that we hold, that potentially could solve many issues for the fund. The results were not satisfactory to us. We decided to focus on disposing some of our smaller properties. There are some processes ongoing, and I think we've notified before that we would be interested in selling, perhaps Spirit or Sky, as some of our smaller assets in this process. If there's any more news in that case, then that would be shared through a stock exchange announcement. I think one key element that we constantly have to manage here is that it's basically cash management.
One thing is the profit and loss statement, but the other thing is a cash flow statement. In order to get our properties filled with new tenants, there is, in some cases, less, sometimes more investment needed. That has been also the reason why the net cash flow of the fund has been negative. The ways to address this, the three ways how to address this and what we've done through the years, is refinance some of our loans, dispose some of our assets, or raise additional funds from our investors. We continue to look for these dynamic solutions for that, and we will share a bit more info in the latter part of the presentation.
I think something that, let's say we are satisfied about during the summer was that we were able to extend a lease in a very difficult environment in Riga where one of the top tenants in the market was looking for alternatives and whether to stay in our building or move somewhere else. We were able to extend and retain that tenant in the current building that they have, that they actually built for themselves, and at similar terms. As it is in the office segment nowadays, many of the large tenants are negotiating down their space. That's what also happened in the case of Latvian State Forestry. The intensive negotiations were concluded in the end of July, but at least we have retained them in the building, holding 5,300 square meters.
Going forward, it's a reduction of 2,400 square meters, and part of the property will be made vacant in about one year from now. There is also some fit-out needed for the Latvian State Forestry premises that will be then conducted over the next 12 months. Of course, we have started to look for a tenant in the upcoming vacancy. I think it would be suitable for schools. We have had some discussions already, and we'll continue to look for tenants in that vacancy, in that upcoming vacancy. Our occupancy figures have improved, but our primary challenge remains in these upcoming potential vacancies. The other vacancy, which we expect, is from the beginning of next year in Lincoln, which is where Swedbank is moving out after 15 years. We have some discussions for that vacancy as well, but perhaps too early to state.
We're making progress at one end, but still, especially in the office segment, tenants are reducing their areas because of hybrid work and less occupancy in the offices. That is the trend I think we can see overall in the market. We are, let's say, happy that we have been able to extend many leases of the top tenants that we have currently in our properties throughout these periods. Slide four, we are looking into the breakdown of the tenants. I think generally a good mix. It has changed over the years, and the focus has been on governmental-related public tenants to keep them, to have them, prolong the agreements. Swedbank, as mentioned, will be moving out at the end of this year. We do have the Latvian State Forestry, the Latvian Police, and the Lithuanian Tax Agency that we were able to prolong recently as well.
International School of Riga, who have moved into one of our offices in Riga, and State Information Authority as one of our key tenants in the portfolio. I think in slide five, one can see the dynamics of, for example, just one quarter of last quarter. How many thousands of square meters are under renewals, which are how many square meters are being terminated and how many square meters we have welcomed new tenants into our properties. It remains still very dynamic. I think the biggest positive development we've seen is in the sports and health sector. We've had MyFitness as one of the ranked tenants, one of the largest fitness groups here in the Baltics, to open their premises in Galleria Centros. I think it's a big thing for Galleria in Riga. The concept that they introduced there is absolutely innovative and that has attracted a lot of people.
They are also, we have also prolonged their lease in Pirita, currently in the negotiations to prolong and introduce their flagship into Postimaja. We have other ideas soon to introduce in other properties. This is, I think, a positive direction for our centrally located assets, to introduce more health and fitness-related tenants into the properties, instead of fashion, which used to be the traditional and services, but it's more now about dining as well. Many completions were made in Europa to bring the restaurants to the ground floor. Still, some fashion tenants have been signed up and introduced, prolonged in our properties, such as Mango, Gant, and Sinsay. Lindex will be opening their shop in Europa. Many things are happening, and gradually to the better. All of these plans need time to implement and capital to be invested.
On slide six is a traditional snapshot of the current situation or where we are with the signed leases and leases under negotiations. As of, you know, this is as of end of August, the most recent data, also updated from the quarter report. We have the actual occupancy being at around 84.8%. In the middle there, you can see the net result of signed leases and expiry and what are under negotiations. We have Lincoln as the major property where a tenant will be leaving the premises, approximately 2,600 square meters. The rest of the lease agreements we expect to prolong. We have also a pet clinic there, which came in just recently. Otherwise, the property is doing all right. We have also State Information Authority there as an anchor tenant who has recently expanded their premises there. This is now the main focal point to find a solution.
In Sky, we are managing the property and some prolongations, but also some terminations. Currently, we are in discussions with Sky about their future plans. Apollo Plaza is also 100% let by Apollo Group when they had a big opening of the ground floor a couple of weeks ago in the heart of Tallinn. We welcome you to visit that property as we feel that property is now transferred into the next cycle and is a very attractive offering for the people visiting. In Europe, we have over the past six months taken a focus towards health and fitness. We have had the clinic open there. We are introducing several other health-related tenants and fitness-related tenants to the third floor. More news is to be expected there in the coming weeks. So far, we're making good progress with the tenants, the incoming tenants.
There has been some additional vacancy over the past quarter because we moved some of the restaurants from the third floor to the ground floor. That we considered a temporary vacancy as we do have a tenant already for the third-floor premises, signed up. In Uppmalas office building, which is a police office building in Riga in a B-class location, the police is happy there, but for the remainder of the premises, it has been challenging to find the tenant. We have all brokers and many brainstorms how to attract them. We have some leads, but it's currently as well a challenging property to find tenants for. In Pirita, Pirita remains, I think, in that sense, quite stable, with the anchor tenants prolonged until 2030 and 2031. Some movements of satellite tenants, but still close to 95% occupancy.
We actually do have signed, we have signed a couple of more leases just now recently in the beginning of September. Operationally, I think the property remains very, very, very, very stable. Also, when you look at the visitor numbers and the tenant turnovers. Now, some good progress, I think, most in our office buildings has been happening in the school property. The school has opened their doors, and some smaller tenants also have moved to the top floors. We continue to have a lot of visits in the property, but the tenants are small, from 50 square meters to 300 square meters. We, of course, participate in tenders for larger tenants, but currently, under negotiations, in the serious negotiations, about 1,000 square meters, which is, I think, a positive sign and promising sign.
In Vainodas, currently, no changes to report in this table, but in the next quarters and after one year, the occupancy of the anchor tenant will decrease, as mentioned earlier. We'll be working on that to find a solution. In Postimaja, we have some negotiations on extensions, especially MyFitness. We hope to find a solution there very quickly. We expect to prolong all of the leases, which are also upcoming this year. In Galleria, we have also more tenants currently coming in than leaving. As I said, Riga remains challenging. In some cases, the focus on debt collection is also part of the everyday routine. That the team continues to do on a regular basis. Also, I think Gnostar in Vilnius remains as a well-rented property, with the Lithuanian Tax Agency.
We expect to increase the occupancy slightly also throughout this year, aiming to achieve our ambitious 90% target with all the expirys. Currently, based on the pipeline that we have, we hope to improve the portfolio's occupancy still by a few percent. As we know, by year-end, Swedbank will be moving out, vacating another 2,500 square meters. You know, the net result hopefully will be positive, but it's challenging to reach 90% by the end of this year. Now, I think if you look at the financial results and the profit and loss, then we are trying to keep the results stable and slightly growing. We've been able to reduce our financial expenses somewhat and continue to work also on our administrative expenses as we are being delisted in Stockholm. I will tell you more about that also in the latest slides.
Basically, trying to make the rental income grow despite selling properties. We've sold Meraki in the beginning of the year and reduced our debt burden with that transaction. Even though we didn't do the evaluations now in a mid-year, then operationally, we were somewhat showed improved results. As I mentioned, the focus is on cash flows, and that remains the biggest challenge, I think, in the coming 12 months. We believe that we do have sufficient cash to manage our operations for the time being, and I think we are looking for ways to improve that further. Cash management remains the main topic: what to prioritize, where to invest, and how to make sure that we get into more sustainable grounds.
Maybe a few words also on the debt slide, the next slide, that gradually our cost of debt is also decreasing, but the larger, that's the most expensive, is still our bonds that we need to find a solution to. Without the bonds, our average margin would be around 2.8%. Currently, it's around 3.6%. Most recent cost of debt, around 6%. The goal is to improve that and to decrease the debt burden through various operations. Beginning of next year, we have three loans up for prolongations, and we have started discussions with our banks. Two of them are in Riga, and one is Pirita. For this year, we have prolonged all the debt instruments, but look for a solution with the bank now in the coming quarter. I think there is just some of the key points as an action plan.
We know it's been almost, it has almost taken a year to get us delisted in Nasdaq Stockholm. It's a proper process behind that, but now it's been, I think, finalized already some time ago that the 8th of October is the last trading day in Stockholm. I still welcome all investors to look into either converting or selling their SDRs on Nasdaq Stockholm before that date because otherwise, it will be in the hands of the issuing agent, which holds these units in Stockholm, Nordic Issuing, to sell the units. Just to make clear, the fund does not have the right or capacity to buy back those units themselves. One definitely needs to talk to their bank in order to find a solution.
The positive thing about delisting in Nasdaq Stockholm, as we know, not a lot of investors have remained listed there, is that we will be able to reduce our operating expenses from the last months of this year. That should positively impact the results of the fund next year. I think one of the key things that we are focusing on, apart from keeping the occupancy high, is disposing one asset that we believe is non-strategic for us over the long term. Given the current market environment, that's something that we see is realistic to do. We will definitely be focusing on that. We have also changes happening in the management company.
Maybe a few words on that, that it was also made public that GreenVest as an investment management company here in the Baltics, and it's an international company actually, is assigned a transaction to buy the Baltic activities of Northern Horizon Capital Group, namely the management company of the Baltic Horizon Fund. They are, I think, very local, very experienced property investors. I think they bring definitely new energy and new contacts and as well, broad capital into the mix. We continue to work with them throughout this transition period very closely to brainstorm ideas, what else to do, how to further improve the economic situation of the fund. We definitely look into the future, how this fund can be improved and stabilized.
One of the topics that we are discussing, in addition to selling a non-strategic asset, is to have a potential new offering of new units only, targeting or offering to the existing unit holders. As of this point, I can say that the parameters are still being worked out by the stakeholders, the parties, and the management. This is a way to further decrease the bond, which is definitely the most expensive item in our balance sheet. We would like to have those returns directed towards equity investors. That's definitely one reason to do it and improve the covenants that we also have agreed with the banks, as well as have sufficient liquidity for the full fit-out needs that the remaining occupancy or vacancy still needs. These are the things that we're going to be contemplating as future plans, and more info will be shared in due time.
These are the tools in our toolbox that we work with in addition to working to increase the occupancy of the fund. Let me see if there are any questions, and then happy to answer them now at this point. The one question here is, what is the future plan of S27, which is the school building? In this area, there are, it's a Skanste district, and it is an area with many office buildings. Some of them are brand new, just finished over the past 12 months. It has become more lively as an area. Our property there is, let's say, comparatively somewhat older, built in actually about 20 years ago, a building for a bank. During the last decade, it was renovated and became the headquarters of one of the largest construction groups.
I think in this cycle, the only solution to this property is to find alternative use, and that has been the school. The ultimate plan actually for this property is that it will become a school in its entirety. Currently, it's rented out to the school 50%, and we are finding smaller tenants to fill in the vacancy that is there. We are at the same time in discussion with the school to address, let's say, their further needs, so that they could sign a very long lease agreement for the entire building. The question is, what is the ultimate future plan for S27? It is actually to have a school there. It's a great location for the school. They're very happy with the premises that they've received, and I think it's a good fit. Both landlord and the school are investing.
We believe that such a tenant would be a sustainable long-term tenant in the long run. The question was, from the proceeds of Meraki, where were these proceeds used? Of the roughly €16 million price that we sold it for, around €10 million was a bank loan, and €3 million was paid to the bondholders to reduce the bond. €3 million has been, let's say, partly used to amortize some debt, but also to use it as fit-out in other properties. Some, I think, is still in reserve. The question is about GreenVest. It is true that over the past 12 months, they have bought from the market a share in the fund. Right now, it is approximately 30% of all units. I think they've invested quite heavily into the fund. Also, their plans to acquire the management company shows, I think, their commitment.
I think they are definitely interested in the future positive development of the fund and putting all efforts they can together with the management team to make it happen. They definitely have skin in the game as well. I would also definitely look at it as a positive development for the fund, for the properties, and for the fund investors. When it comes to the additional liquid issue or unit issue, it is yet to be determined. First of all, discussions with potential investors, what would be the interest, and that would determine the amount to be raised. I would not put the number at the moment out there, but as we have said, this is to reduce the bond, which is currently, our bonds outstanding is around €19 million.
I think we definitely would then, in this case, if some of the bond will be repaid, improve the balance sheet and operational results of the fund. I think more, a specific question on school again. Currently, the school is in half of the property. That is currently what they need, but they do have other premises in Riga, where other classes are located. Eventually, they ideally would like to grow into the building, but this is step by step. That's the master plan that we have. We need to solve, as a landlord, an issue which is the sporting facilities for them. That's what we're working on, and hopefully, we'll find a solution soon. That's the master plan for S27 to become entirely a school building.
Currently, the satellite tenants there are happy to see the school as a co-tenant because either they have dentist visits there or other reasons. There are some of those that are associated tenants and work well with the school, and the parents visiting and also the kids. If I remember correctly, around 300, 350 kids are in the building. As mentioned, from the Meraki disposal, some of the funds were used to redeem the bond, also to pay the bank loan, and some of it is still in reserve in our cash line. If there are any more questions, please let us know. Otherwise, I hope this presentation has been informative.
We continue to work on the occupancy as we have and a financial strategy going forward, focusing on potential disposal of smaller assets and then discussing the equity raise, offering the opportunity to all existing unit holders to take the fund to the next stage. Thank you very much for attending, and let's be in touch soon.