Baltic Horizon Fund (NHCBHFFT) Earnings Call Transcript & Summary

Yes, hello, good afternoon. This is Tarmo Karotam, Fund Manager of Baltic Horizon Fund. And welcome to the third quarter results overview webinar. As usual, 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. So in case something remains still unanswered, then please share your question in the question box. So 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. And so far, our focus has been on office and retail properties in the capital cities, but we have also diversified our strategy now to other segments such as logistics, aged care and light manufacturing if suitable objects come along. And I think some movements there can be expected in the upcoming quarters for Baltic Horizon Fund as well. Overall we -- our #1 priority is to be a recurring and consistent dividend payer or from paying out the rental income proceeds from operations to our investors on a quarterly basis. And we have about 150,000 square meters of lettable area in the Baltic capitals and 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 our bond to be at BB, BB+ level, so that has remained stable over the years. Now getting into the results of the fund. It's, I think, very straightforward and understandable that the COVID period has not been that easy for Baltic Horizon Fund due to the central located shopping centers that we have in our fund comprising of about 1/3, slightly more, of our assets. And 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. And the tenants don't have revenues. Then it's very hard to extract any rents from there, but I have to say that our teams have done as good of a job as possible to keep the relations with tenants and manage the discounts or deferrals of the payments. However, because of the lockdowns and -- our results have been affected. And in terms of net rental income for the portfolio, in 2020, the first 9 months, we achieved 15 -- over EUR 15 million of net rental income. This year, because of the longer lockdowns and -- 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, but I will get back to that a bit later. It is -- of course, has been a major challenge for us to -- when the practical life, when shopping centers are forced to be closed. And there's a lot of communication that has been happening between the shopping center tenants and us to find the best ways forward. And so I think many tenants are increasingly optimistic and have sort of stayed as an -- long-term tenants at our properties, but attracting new tenants is still a bit difficult because again we have a lockdown in Latvia. What -- I've heard just today that the government is still very much interested to open the life of the city. And so it will [ be finished ] by Monday, when restrictions will be eased and the shopping centers will be allowed to open during the weekdays. And 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, but 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 were, and also the tourists. So every crisis is a bit different. Now I think there's been a few questions that what do we see in the future. And how quickly and what sort of recovery can we expect? So first of all, to address the valuations in maybe more elaborate way: We have had to accept a devaluation of about EUR 40 million over the past 1.5 years, and there's a few reasons for that. I'd like to just explain that maybe in more detail. First of all, it is because the shopping centers have been closed. And recovery of the shopping centers in the eyes of valuators is always been more conservative, so -- and because of the uncertainty on the income and how long these lockdowns will be, the sort of intermediate valuations have been lower. So 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 the, again, uncertainty on the income side, have remained conservative and rather booked these properties at lower-end levels. So what we can expect is, first of all, to understand that lockdowns are not recurring anymore for the shopping centers especially. And it's good to see at least in Estonia that rhetoric and the discussion at the government level is 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. And shopping centers, being large structures where people visiting can be managed, is not probably the place where -- and everyone wearing masks, so it's not a place where the virus is spreading the most. So the more specific the governments can be in that regard, so -- the better it is. And this is also what the tenants have now understood is that the lockdowns are not likely to be recurring. And then hopefully also, the one in Latvia was last. And it was a short one, so -- and it will have some remuneration. So that would give definitely and already is giving [ positive movements in the tenant's head ] and saying that the life needs to continue. But going, coming back to the NAV and where it used to be and also the market price. They have been following quite similar terms than -- in order to come back to the EUR 1.4 sort of NAV, and also the price in stock market. I think 2 things need to be happening. First of all, the lockdowns need to end; and that we can start signing up tenants at a more faster space -- pace and fill-in our vacancies to show the valuators that realities is that everything is improving, as well on paper. There's many tenants that we have in the pipeline but being hesitant to still sign the prolongations. And definitely the refurbishment projects that we have need to start producing income. That's one thing. And if -- for example, if we have EUR 40 million back now to the valuations that we have lost, then we would be around EUR 1.4 of the NAV. So the other thing is, of course, dividends. And we fully understand that Baltic Horizon has been viewed most -- foremost as a dividend-paying entity. And it's always been a very difficult decision over the past 1.5 years what sort of the dividend should be. And given the uncertainty around valuations; and the future; and 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. So in terms of the cash flow from operations, fund has remained very positive from the portfolio because again it's an -- [ 15 ] cash flow generating assets. So we have office segment which has remained, I will say, very strong, showing [ events ] and 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 beginning of the year was Q1, where most of the discounts had to be addressed. And we still achieved a -- more than a EUR 4 million on net rental income from the portfolio, but compared to the peak in Q1, it was approximately EUR 2 million below what should have been in normal circumstances. But we've seen a gradual recovery, and so far, we don't expect Q4 to be affected as much as we had in Q1. So I think Q4 will be a little bit similar to Q3, but that remains to be seen because of the lockdown in -- 1-month lockdown in Latvia. But I think it's really safe to say from my eyes as well that this Q1 was the bottom. And I'd say the first half of the year was the bottom of the crisis for us. And again it's very much related to lockdowns for us, and the sort of the upward and positive forward-looking trend of our shopping center tenants. In regards to trade receivables. This -- in September, it's just an abnormality because we had CBRE, as our new property management partner, onboarded. And it is basically a technical glitch in that sense that, in real life, tenants are paying and -- invoices quite well. And the only discussions that we have right now is again in Latvia, but as tenants are also promised some support, then we will see how much that actually affects our results in Q4 later on this quarter. Some of the key events for the fund just to highlight. We've been keeping very busy during this lockdown period. And a lot of work has been done to make sure that we report everything that is going on in our portfolio in a very open manner. And it is unfortunate that the valuations have been affected, but we have reported that in full detail, and I think -- I hope that, that has been appreciated by the investors. And it has been appreciated by the European Public Real Estate Association 2 years in a row, so we're really happy about that and planning to keep on 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. And by now, we have achieved, I think, for all of them, which was the target for this year, so we can say our office portfolio is fully BREEAM certified. And in regards to our future plans, which I will discuss a bit later, it's quite difficult to stand still during the [ crisis years. Crisis years ] is exactly when one needs to operate and prepare for the next up cycle. And I think that's what we've been doing in a robust case, changing the concept and -- but also planning, yes, the expansion of Postimaja and adding some office premises there and making that a real long-term success but as well the office building Meraki completion. And all of that requires capital. And we've had extensive discussions how to extract capital and turn-around some of the investments and either use proceeds from sales of properties or bond or the new equity. So these are the things that we are really exploring in detail, and as well very tough discussions, but I'll come back to that a bit later. I like this slide because in a way it shows very directly the footfall and turnovers of our shopping centers during the lockdowns. And it also shows how severe the lockdown during the first 4, 5 months of this year was, which directly affected our rental income, so -- but it's also very clear that, once the restrictions are lifted, the recovery of both footfall and turnover is coming back almost instantly. And I think we are achieving more than 60% of the pre-COVID levels. And what's interesting to see is that the turnovers are definitely already at around 70% because people are visiting less but buying more. And hopefully, after October and November, December will be a very important month for us, whether the shopping centers are allowed to remain open, because during Christmas time everybody will shop and it's just something everybody does. And so if the shopping centers are allowed to be open, not like last year when November already and December brought the lockdown -- so we hope to continue this trend. And I think to achieve 100% will also mean that the tourism have to -- has to come back. So that will, hopefully, happen next year, but again I think this slide shows how severe the lockdown was. And then hopefully, that will be the last such a long lockdown, as can be seen already today as well in Latvia, that it was only 4 weeks and that helped very much. So some of the figures that we are also monitoring is the vaccination. And that has improved and getting closer to the targets. And what we can see, of course, in the Nordics is that when we have quite a high level of vaccination and people are monitoring, there has -- that life is really back to normal. And it's quite -- I think, quite interesting to see this case because we know where we can be as well; that people being more prudent and making sure that, if they're sick, regardless if they're vaccinated or not, then they stay away. And I think it's already today you can see that the waves that we've had in the Baltic states are now coming down, showing positive trends. So hopefully, that will continue and the Christmas shopping can happen. So I think it's very key for us as a fund to see that. Overall, aside from the lockdowns and places being forced to close, which has hampered the businesses, the actual growth of the economies have continued quite strongly. And it's not only because it's a low base, but it's because the unemployment has decreased and is getting to very low levels. And it's because of other sectors doing very well -- and the Baltic states are open. Economies are quite diversified. So what's been majorly impacted is, of course, tourism, very severely, and -- but hopefully, that will come back as well fueling the economy even more. What's -- I think a very interesting slide again, what also that tenants, shopping center tenants, cannot overlook is what the trends are in retail trade. And it is clear that people are also shopping more online, but it's also very clear that for the tenants it's all about the omnichannel shopping in the future because what is clear is that around 80%, 90% of the turnover is still done in traditional shopping centers. And I think that will stabilize around 80%, 85% in the Baltics and because we are still smaller cities where shopping is 15 minutes away, but anyway, the trends following the increases in economy and salaries, for example, is definitely fueling retail trade. And as well, we can see it from the increase in deposits. And people are ready to spend. They've been saving up, so I think we have definitely positive outlook on our retail segment going forward, but 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 the -- of again the discounts, but we expect this to start coming back. And there are some now changes in our tenant mix. As you know, the G4S property was sold. And I will get back to that later, but otherwise there's no major changes in our anchor tenants at this point of time. And major focus is on shopping center, prolongations of smaller tenants. So overall, just I think the -- our team has done a great job, considering the circumstances, if in shop [Audio Gap] vacancy, but we have already -- 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 there are like usual tenants that are expanding, tenants that are keeping still and finding efficiencies but also some tenants that are looking to decrease. So I think it's -- like it was quite similar pre COVID, but maybe the only difference is that -- the layouts and the type of work that has to adopt interior design and how work is being done. 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. So just a few words. This is something very active since September this year and it's been a -- quite a major project. So Europa, we have really, really turned this concept around. And it's, I think, a very good time to do it because some of the -- many leases are ending. And we have ended some of the leases ourselves because of that -- of the situation. And we have great interior architects onboard from Finland, Bolder, and I think the end results will be very attractive. And it will be addressing the environment, the city center of Vilnius, which has been growing. And when tenants are and people are back in the offices and more residential is being developed in the neighborhoods and -- it will be a very attractive location. And foothold. We aim to open it [ already at the end ] of this year. As far as I know, that -- we have, I think, half of the operators already signed up, so I think that's great news for us, to see that food operators are also seeing very positively the future. And we have signed up a few also new tenants in the other areas, but as you can see also in the table, the pipeline, the discussions that we have with tenants is -- and this is a real number and it's quite large, so -- but in terms of actually signing up new leases, it's still not that easy, but we've done also several prolongations. And I think it's also good to note: From what I see is that retail -- and this is not only for Baltic Horizon. Retail centers in the Baltic states will move more towards turnover-rent-basis rental agreements, having a fixed minimum, but definitely the turnover part in many leases will be the reality. And -- but I think this is really an opportunity because when -- trades are coming back and people start shopping again. And there's all many reasons why to expect that, as discussed before. Then this is definitely a positive sign for the landlords as well. And one thing we're definitely not doing is -- there's been questions about how long term are our discounts. And something what -- we're definitely not doing is signing up, let's say, 5-, 10-year leases now during very tough times with some of these tenants at very low minimum rentals. So if we are signing at -- something at a lower fixed rate, then there will always be a turnover component potentially allowing us to exceed any expectations that we have when the lockdowns are over. Meraki development, first tower. And these are the most recent pictures. As you can see, Domus Pro complex is right next to it. And I truly believe this will at some point become a very nice mixed-use complex and as it has health care. It has a swimming pool. It has a pet store. It has restaurants, food stores. It has offices, [ tile shop ], shoe stores, so it's a good sort of very convenient complex. And finally, we have also the facades mounted, and that has definitely given us more leverage in negotiations with the tenants. And we're finally able to bring tenants to the building, and [ then there are ] 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. And that, of course, will again contribute positively to the future valuations and our generated rental income from our portfolio. So now a few more words on the sales (sic) [ sale ] of the G4S building. And in -- we had -- we weren't really planning to sell it, but we had a -- the buyer approach us off market and as it was quite a personal sort of project. So the developer approached us with quite attractive terms. And when we analyzed the future of the property after G4S is moving out and vacating up the building, then conversion into a multi-tenant property will have been quite capital intensive. And since the property, for us, it's -- I think it's very unique architecturally with property, but it definitely wasn't as efficient as we would expect our portfolio to be going forward, so we decided to use the opportunity and exit from this property, having the proceeds available now for reinvestment. And we have 1 or 2 projects in the pipeline in office and logistics segment, but definitely we have plans to move forward with the Postimaja project, so some of that can be invested into Postimaja project to create additional value. And it is -- something that no company, no fund can overlook is the ESG goals; and that's been a major focus for us over the past few years. And we're fine-tuning this and achieving already some milestones. 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. We have more than 230 tenants, and -- but I think our tenants are very professional institutions, so introducing those clauses has been quite successful. We have analyzed as well solar panels. We have, I think, now 3 solar panels that have been mounted in our portfolios; and of course, electric vehicle charging stations. And we're very much keeping an eye on our -- on building energy certificates; and making sure that if -- how can we achieve better results and in an efficient manner and, if not, then -- for example, in G4S' case, then to exit from the asset and invest proceeds into newer properties. And achieving GRESB 4 star is definitely on our desktop as to-do list as well. So once again the view of our office properties. Generally, properties are doing very well. We have prolonged the lease agreements that came due. And we're continuing with that, so -- and working on vacancy in Lincona to lease it out to the current tenants, which is also in negotiations right now. So hopefully, that will show positive results. So overall. And this is, of course, a long term -- more of a medium- to long-term goal is to grow the property portfolio not only through expansions of our current properties but to bring more diversification in -- also in other segments and achieve also acquisitions with long term -- more longer-term rental agreements. And it is so that the year '21 and '22 will be -- they are important years for the fund. And we are -- because of also some lease agreements coming to an end, which has affected also valuations, that they're coming to an end this year and next year. We plan to prolong them and really work on the weighted average lease term then maybe selling 1 or 2 projects to free up capital to invest into a -- more long-term sustainable projects in nature and -- yes. So really, 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 show it to the market, but there's some concept change also on the fourth floor with food hall and potentially new terraces and a new [ sports ground ]. So in order to -- yes, to sort of focus also on numbers a bit, when -- and this was addressed a bit earlier as well. We've tried to keep the admin expenses during the times quite stable and then work on the rental income, but the major difference and the drop in rental income is because of shopping centers being closed, forced to be closed; and the discounts we're forced to give to the tenants in order to secure, yes, long-term relationships and occupancies. So in regards to the valuations. We've had a devaluation of EUR 40 million and the latest discussions also with market participants and valuators. So I'm quite positive that, that should be really the bottom of it. And when we can also start recognizing revenue for our expansion projects, that should definitely bring back some of the value and -- but you know lockdowns need to end and to regain that value, that we can sign the leases that -- and -- that we want to sign and increase the occupancy. That directly affects the valuations. And it's difficult to say what sort of valuations will be year-end, but I hope they will be stable, showing some trend to the positive side. But if one would ask how long, yes, it will take to get back to the, well, previous levels, then I would estimate around a year after the lockdowns are over. So we're very much working to show much better results during the next year. And that brings me to dividends and because we know that that's how the investors look at us. And we -- I think we're quite appreciative of the investors remaining patient during these times; and that the dividend result that we have accumulated, there is a lot of questions that -- how and when are -- we're starting to pay that out. And in that sense, again, it's not an easy decision to make. And I think overall we've definitely decided that we're on a recovery, so that's why we have also increased the dividends, based on the generated net cash flow, to around 80% of Q3. And we're really planning to -- in case normal conditions continue, then to have these dividends at these levels or -- and slightly improved then every quarter. Investors have asked me as well, that, "Why don't you guys pay out the whole distributable -- the cash flow that has been retained during the cash -- during the COVID times?" And it's, in that sense, I fully respect that this is something that, the dividend, the investors have earned and that should be paid out. And we will be paying that out, but if to pay it out again in one time in 1 quarter, for example, that would create a lot of volatility in our unit price, I think, but also attract a lot of speculators to start looking at that as a onetime option. So it's something that we're definitely exploring and discussing on a regular basis, but I think it will rather be a more gradual payout than onetime payout in the future. But again, we are discussing this and we are trying to hear what the investors are saying and make the decision based on that, but 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 we had quite a lot of acquisitions done in 2016 and '17. And when we take a 5-year loan, then -- these loans become renewable. And I'm quite happy that in 2020 we didn't need to, during the lockdowns, address this at the same time, so many of our loans, Pirita and Sky, we're already prolonging and -- but what happens in '22? So we have quite a few loans that needs to be prolonged. And I'm happy to say that we have started this activity as early and received offers from our partner banks. And I'm quite happy to see that they are, I would say, quite similar in term that they were in the past, regardless of the fact that we have been having issues with the lockdown and -- for our shopping centers. So I'm quite bullish that we can prolong the loans in -- that are due in '22 at quite similar levels, but these are still yet to be negotiated. And we hope to give more -- well, definitely there will be more news about that in a next webinar after the next quarter, but banking sector is definitely strong. Banks are lending and as well to the partners that they have. So I think that is exactly around 45 minutes. So if -- let me see if I can see some questions here.

So the question on Meraki. And as I said, we have a few leases there which are in place, but we're still looking for the anchor tenant. There are negotiations ongoing. And Vilnius is quite a competitive scene, but I think we have a great product there. And so it's high pressure on the progress. CBRE -- and we're working with Newsec and Colliers on the ground as well. So again we hope to -- now that you can see that 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 and on prolongations. And there was a chart here which showed that a lot of negotiations are ongoing on the pipeline. And we have signed up 2 new leases, but we're also replanning the concept of the center. And certain prolongations have happened, but we expect that there will be definitely new tenants coming, new anchor tenants coming to the property. And it's yet too early to announce, but these negotiations are ongoing, so it's definitely not that there's nobody knocking on the door. It's everybody is trying to now position themselves for the new up cycle after the lockdowns, all the tenants. And so it's just active negotiations to find the best solutions. The question on Meraki and the financing and the bond. So the bond was used to continue the construction of the first tower, and any potential fundraising that we have or might be planning is not dependent on that. So 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. And yes, this is a discussion we've had with EBRD for many years to bring them onboard as one of the anchor tenants -- anchor investors. And we have discussed, of course, what should -- how to align our strategies in terms of composition of the portfolio going forward. And we've discussed also the investment size that they potentially can invest into our fund over long term. And I could say maybe that this program is, I think, understood by us as more of a long-term program that, for example, we're not raising, I don't know, 50 million in one go from them or [ 30 million ] or anything like that but rather do it in smaller amounts and in case we really need the capital. And there's a lot of activity in the portfolio. And we would -- we are thinking, of course, as well to potentially maybe invest some of the cash that we have. And we are doing that, but in order to really extract the long-term value, for example, in Postimaja, we need additional equity. And mainly the potential fundraising plans are around that, and I know there's pluses and minuses for that. And we also hope that we can address any concerns in that case when the time comes. So we haven't yet decided on the details of that. The question is on the bond issue of Meraki part 2. That's something that we can do, but we -- it will be used for the second tower. So if in -- if we're able to fill the building with tenants and when we think that it's time for the second tower to be built. Then most likely then we will address the second part. So it's not yet clear how -- when to do it, but it depends, I think, on the market. We could do it as early as first half of next year. So it's something that it's an option for us, and it's a great option for us to use to complete the project in full. Then there's, I think, a good question that, knowing the pandemic and the COVID-19 and then 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 no crisis is the same. And it's been very interesting also for me that this crisis has really affected really the centrally located properties rather than anything else and not only in the Baltic states but across the neighboring countries as well. But I think, especially in retail but also in office to some extent, people still like to be in the city center where the buzz is. And not all tenants want to be there, but 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. That's one thing. And they will definitely shop. And they will -- tourists come to the destination, not to shop online, so it's definitely money we expect. The second thing is that city center is always a destination for anybody. So I think on long term, again, these properties will prevail. And they will have, I mean, visitors that do spend money. And 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 like the best offering possible for them to spend the most amount of money and how to have the best tenant mix. And that's something we want, really are trying to address in Europa now imminently and -- but also in Galerija and Postimaja. And in Europa, the target audience is the neighboring people that are working there or living or spending time, yes. So -- and so the answer is definitely yes. We absolutely believe in the central locations going forward after the lockdowns. So a '22 payout question. So I think it's a very good question. I will say that what we are guiding is at least 80% of the generated net cash flow and because we don't expect the lockdowns to continue. So it's recovery from here and at least 80% of the generated net cash flow, so yes. And we know that, when we did pay out 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. And I think, after the lockdowns end, then -- pre-COVID times, we actually -- generated net cash flow was around -- almost EUR 0.12, and the payout was more than EUR 0.10. So if we achieve the pre-COVID levels, then this is somewhere where we aim to be, and hopefully, that will already happen in '22. So we are definitely, yes, thinking about acquiring new assets 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 over the years, we've had a major discussion on how much, to what extent should we hedge it. And 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, in parts or to some extent. And 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 why we don't expect or market doesn't expect the Euribor to start rising that quickly, so it really depends on the loan tenures. If it's a 5-year loan -- I think we look at it a bit differently when it's a 2-, 3-year prolongation. So it's hard for me to give you a straight, concrete answer, but I would say we are rather careful of the hedging at this point but definitely analyzing it case by case. Then the question is on private placement and that we are thinking of. And question is that -- private placement versus public offering, and it's a very valid question. And there's a few, let's say, reasons for that. First of all, the -- private placements can be done much more efficiently and much more quickly. And public offering, considering just from a practical point of view, it will take at least 2, 3 or even 4 months to prepare, whether -- private placement is something that one 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 to participate, and then we can take this into consideration. Other than that, investors can always review their position in the stock market. And -- but so we are 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, it's something that what -- that can happen as well in next time that we need equity for our projects ongoing, but yes, it's -- we need to understand that it takes time and it's more costly. In regards to the private placement and the equity issue. It's something that we are working on. And there's no concrete, let's say, amounts that we know yet. And it's legally up to EUR 25 million that is possible, with the exemption, for the private placement, but I think the actual need is rather what we're targeting, is [ 10, 15, around 15 ]. So question on the elderly care homes. We are analyzing a few projects, but it's quite a risky investment today. So I think right now we're -- 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. And so we're still analyzing how to best approach it based on the experience we have in the Nordics, but again the Nordics is a different market. But we have identified a few very professional players and the negotiations are ongoing [ now ], but prioritizing currently, I think, logistics would be fair to say. So in regards to the [ rates ] of the private placement or any issue, it's something that we have to consider as what we can do based on the fund rules. And I think, if anybody is interested in participating, that's something that we can discuss separately, but again it's we are exploring various sources for our capital needs, being bonds, being the cash that we are freeing up and new cash to be raised. So it's a difficult discussion sometimes and because actually investing at the right time can create a lot of shareholder value, well, down the road. And missing that opportunity can as well prolong the recovery of our fund's portfolio, yes. So as well, I see a very good question that -- to have a more of a straightforward, let's say, promise to the investors in terms of dividends being paid out. And I think this is something that we will definitely discuss more. And considering just the uncertainty over the past few years, it's been difficult to decide on a plan in January what the dividends will be. Because I think something that we have clearly stated and we stand by is in normal times we want to pay out at least 80% of the generated cash flow, and I think that gives quite a good road map for the investors. And actually, pre-COVID times, we paid out 90%, 95% of the cash flow because we saw the fund was generating good cash and we had sufficient capital for our growth. So I -- it's something that potentially we could aim for also in the future, so -- but we will think about that. I think it's a good comment if in now -- in more stable years we could already have a very straightforward road map for the dividend for the entire year, for example, a 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 because of the supply-demand situation in the construction sector, the first sort of view on the potential construction companies didn't really match ours. And at some point, it got into, when we went into more details then during spring, summer, construction companies even said that, "We'll -- not able to even quote you or make you a quote." So it was like almost going to a restaurant, ordering food, not knowing what you're going to 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 savings, potential savings. And we have also revisited the business plan, what we now foresee for the future; and want to make an -- internal decisions about going forward during the next few weeks. So I think, when we have made the decision, also understanding the finance, the sources of financing, then we will announce it to the market, like we did with [ Europa's ] case, very clearly, what are the -- what is the exact time line and when it will be completed. So I hope that we can announce something already, yes, in December, in Q4. So it's a strategic priority for our fund, as we believe in our city center assets on a long-term basis and get them ready for the next up cycle after the lockdowns and so on. And that goes for Europa, for Postimaja and for Galerija and -- yes. So thank you very much for these questions. And I hope this was informative presentation. So going forward, again, our #1 concentration is on getting the new leases signed and prolonged; or -- and really get the NOI of our refurbishment projects from Meraki, from higher NOI from Europa; and filling in our vacancies and as we have started to increase our dividend. And I think we believe that -- in the upcoming quarters, that we'll start to show results and that we're able to recover from the valuation losses and uncertainties that we've had over the past 2 years. So real estate is a long-term business. And I think -- I fully appreciate our investor base that -- to be resilient and patient with the fund. And hopefully, better times ahead, so definitely working on that. Thank you. Have a nice day.