Market is now mature for the listing of Eurobank Properties

Another property investment company is about to enter the Athens stock market: EFG Eurobank Properties SA, an EFG Eurobank Ergasias subsidiary, claims it is ready to get listed, probably by the month’s end, offering Greek and foreign investors a new tool for an indirect positioning in the domestic real estate market. «An effort of at least six years is now bearing fruit in the development of the institutional sector for investments in the real estate sector,» the chairman of Eurobank Properties and Eurobank’s Risk Management General Director Haralambos Kyrkos tells Kathimerini. «Today Eurobank Properties is one of the top companies in Greece in the domain of investments in property. The application for listing on the Athens Stock Exchange is the culmination of this long effort,» Kyrkos says proudly. According to him, the new entrant on the stock market, following the Piraeus Bank subsidiary, will conduct its public offering by end-March if everything goes according to plan, Kyrkos stresses. «We have chosen this period for realizing the plan of putting the firm on the stock market because at Eurobank Properties we are perfectionists. Even though without a doubt this is a good period for the market and there is a mood of optimism, that was not why we have chosen to get listed now; we believe that the two-year-old law about property investment companies has now recovered from its teething problems, as some time was needed for some gray areas in the law to be clarified, although there remain some tax issues that are unclear,» explains Kyrkos. He reminds us that before Eurobank Properties became a real estate investment company, it was a very successful property consultancy firm and had a number of significant loans for its investment activities. «In order to change into a property investment company, it had to transfer or stop its service provision, transfer various holdings it had and repay a significant amount of its loans. As you can understand, all this requires time and effort,» Kyrkos argues. He says he is happy that today, even after some years of delay, the authorities have started seeing the situation from the right viewpoint – that of the investor. «The law about property investment companies allows for a small percentage of borrowing for the conclusion or improvement of properties. Ideally this percentage could increase (according to the tested international standards in the Real Estate Investment Corporations’ domain) and expand in terms of aims to the partial funding of some investment,» Kyrkos suggests and adds that «fortunately leasing is allowed – despite some limitations concerning equities – so there is at least an option.» He further notes that the borrowing permitted, albeit restricted, combined with leasing «improves significantly the existing framework and makes it acceptable.» German link Eurobank Properties intends to offer 5,510,066 new common shares and one of its stakeholders, REIB Europe Investments Limited (a 100 percent indirect subsidiary of Deutsche Bank in the property sector) intends to offer 1,100,000 of its existing common shares to Eurobank Properties. The German bank’s subsidiary also intends to offer up to 680,000 more shares to cover any excessive demand. The reduction in the German bank’s stake has created some questions, but according to Kyrkos the truth is very different: «Deutsche Bank, through its subsidiary, is not departing from Eurobank Properties but maintains a stake that will allow it to have active participation in the company. I would phrase the question the other way around: ‘Why is Deutsche Bank maintaining a significant stake and not departing altogether?’» he says. The Eurobank Properties chairman goes on to remind us that, unlike Eurobank, which is strategically positioned in the Greek market and plays a dominant role, and Lamda Development (the other stakeholder of the company), whose main object is property development, Deutsche Bank operates mostly with the mentality of an investment fund. «This means it positions itself somewhere, supports and promotes the procedures until its investment matures; then at the first opportunity, such as a public offering, it liquidates its profits and proceeds with a new investment,» explains Kyrkos. On December 31, 2005, the real estate portfolio of Eurobank Properties consisted of 27 properties of mixed leasable surface of 165,307 square meters, mostly in Athens. Its valuation came to 271.3 million euros. The portfolio includes office buildings, stores and the logistic of high standards with particularly reliable leasers, the majority of whom are major and widely recognizable companies. «The portfolio has been structured in such a way as to secure the risk spread required through non-related sectors,» says Kyrkos and comments that «Eurobank Properties is an interesting investment proposal within the context of the development of the property investment sector.»