Bill for listed realty firms in the works

The government is preparing to table a bill for the listing of Real Estate Investment Companies (EEAPs) on the Athens bourse, sources say. This has already been announced twice in the last 12 months, but the reports stand a greater chance of being proved right this time; the government now has a pressing interest in the scheme, given its recently declared plans to set up its own EEAPs with a view to tapping the considerable stock of state property. This is designed to boost public revenue and support the 2003 budget, which looks weak. EEAPs hold the prospect of an attractive and relatively secure alternative option for stock investors at a time when the bourse is reeling from the crash of share prices. They look like being one of the best options for investors primarily seeking good and reliable dividends rather than capital gains. The bill provides for EEAPs to own a specified minimum value of leased commercial properties such as shops, offices and parking lots, but not houses or hotels. Income will come from the leases which are based on long-term contracts, making the size of the dividend investors can expect relatively predictable and attractive, given that such companies are subject to almost no taxation. In contrast to other property-holding companies, EEAPs do not account for depreciation costs, are not subject to property transfer taxes and do not pay income tax; almost their entire revenue, therefore, is profit. As such companies are basically stable income earners, their share prices are usually less vulnerable to cyclical fluctuations. They also have successful track records, extending back about 15 years in other European bourses and about 40 years in the United States. EEAPs will have to be listed on the bourse within a reasonable period after being set up, like portfolio investment firms from which they differ significantly in other respects. In the case of EEAPs, investors’ decisions focus mainly on the dividend. Such buys are not for speculative runs and their prices are much less susceptible to collapse. They are also different from Real Estate Mutual Funds and property development companies. The net return to investors is estimated at 5-6 percent, one of the best options currently available.

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