State into real estate

The state administration is following in the footsteps of Greece’s National Tourism Organization (GNTO) in developing its long-dormant properties. The Public Real Estate Company (KED) has two major aims this year – to make progress on its state agency relocation program and list the Real Estate Investment Company (EEAP), a subsidiary it has just set up. Any legal problems in the transfer of ownership of state property to EEAP have been overcome. The Capital Market Commission has already approved EEAP’s plan and the company has obtained its operating license. EEAP’s portfolio includes, at present, 24 commercial properties, plus some properties housing peripheral administration services. The total value of the portfolio’s holdings is estimated at 86 million euros. EEAP also holds, as the law mandates, 14 million euros in cash. The effort to develop state administration property is still at a very early stage. As in the case of the land register, which is incomplete, many ministries lack a register of all their properties. Last year, KED completed the register of the Economy and Finance Ministry, which owns some 70,000 properties. Creating the register is the first step toward developing the property, says KED president, Professor Yiannis Christou. He added that KED has also become an adviser to many public utilities which want to create such a register. KED will try to convince these utilities to place part of their portfolio with EEAP. The alternative would be for each of them to set up their own property investment firm. The years to 2007 will see an extensive relocation of ministries and other state agencies, which will cost a total of 2 billion euros. The magnitude of the change makes necessary KED’s cooperation with the private sector. «For this reason, KED promotes the signing of Public Private Partnership (PPP) contracts to ensure the financing of the program. This will help the state sector evolve from a simple owner and builder of property to a strategic manager,» said Christou. KED has hired Bayerische Hypo- und Vereinsbank, Greece’s Investment Bank (a s ubsidiary of Emporiki Bank) and Lambert-Smith-Hampton as its advisers in planning the relocation program and finding the necessary financial instruments.