Greece seeks to raise 400 million euros by securitizing real estate

Greece’s state privatization fund will attempt to raise 400 million euros ($508 million) by securitizing real estate assets in a move that could attract much needed investment to the debt-stricken country.

The Hellenic Republic Asset Development Fund will sell shares in a company with about 300 properties ranging from retail, office and tourism-related real estate including land for development, Andreas Taprantzis, the fund’s executive director, said in an October 8 interview in his Athens office. The company will then sell debt backed by the properties.

“This transaction is important for investment in Greece and for society, not just because of the immediate returns it will generate, but this will bring multiple sums of money into the real economy of Greece,” Taprantzis said.

The privatization fund is tapping into renewed investor demand for Greek assets as the country emerges from a six-year economic crisis, which enabled it to return to bond markets in April after a four-year exile. The fund has completed 1.9 billion euros of real estate transactions over the last year.

Vacant buildings account for about a third of the real estate that’s being sold by the fund, while another third of the properties are occupied and generating rental income, Taprantzis said. The rest is made up of development land, he said. The fund aims to complete the deal by the first quarter of 2015.

“The idea is to create a transaction structure that will invite a variety of institutional investors to invest in Greece, from private equity funds to hedge fund investors,” Taprantzis said. “It also offers investors a safe way to invest in developing properties.”

The fund has held two road shows in London and is seeing strong interest from investors, Taprantzis said. If the project is successful, the fund will seek to replicate the deal and has an additional 1,000 properties that could be securitized, he said.


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