ECONOMY

State properties to be sold and leased back

A plan by the Ministry of Finance is entering its final stages for the exploitation of a major part of state-owned properties. This will be done under a sale-and-leaseback scheme worked out by the Greek Public Real Estate Corporation (KED). According to reports, KED has already finalized the list of state-owned properties that will make up the basic core of the specific portfolio. Its value is expected to amount to some -1.3 billion. The plan involves 26 properties, some of which are still under construction. The main objective of KED is to include buildings «of a younger age,» currently occupied by state services, ministries, tax offices and police offices. The young age of a property is envisaged as making the relevant bids more attractive to private investors. Each bid is to be drafted according to the special features of each property. In some cases, the model to be selected will be «lease and leaseback,» while others would follow the «sale and leaseback» model. Property market operators are looking forward to the program’s commencement, stressing that it will almost certainly draw much interest from firms specializing in property investments, given that the specific product offers all of the desired qualities for such companies, and in addition guarantees steady and secure leases. Eurobank Properties, according to reports, is to be among the first private companies to claim involvement in the scheme, when implemented. Properties making up the sale-and-leaseback portfolio include buildings used by the ministries of Tourism and Culture, a Transport Ministry building on Mesogeion Avenue, the building occupied by the Press and Media Ministry, as well as the National Statistics Service building. The portfolio’s final composition is to be decided next month, and its overall value is expected to be higher by at least -500 million, compared to the initial planning. State housing plan With regard to the state’s Housing Program, so far the initiative includes as many as 244 projects, at an overall value of -2.6 billion. The total floor space to be built amounts to approximately 1 million square meters, while basements and auxiliary spaces would total an additional 0.5 million sq.m. Constantinos Gratsios, CEO of KED, says: «Up until now, housing projects were financed almost exclusively by the state. However, the program’s magnitude, in conjunction with the need to save public funds, necessitates the use of alternative ways to fund such projects, through the contribution of private capital. »KED’s target is to achieve a good value for money for the Greek state, but this has to be subject to an acceptable fiscal framework and within the desired time schedule.» To enhance and speed up the implementation of the housing program, KED is counting to a large extent on the private sector. «Private organizations and agencies called upon to contribute to implementation of the Housing Program are not simply construction firms, but now may also include a multitude of other companies, such as real estate management firms, specialized investors in public-private partnership (PPP) projects, as well as credit institutions,» said Gratsios. The first bid KED has already announced the first bid to take place in the form of public-private co-funded projects, concerning the design, construction and financing of seven firefighting stations and offices. Building infrastructure totals floor space of 9,770 sq.m., valued at -32 million, with an increment of 20 percent for heavy maintenance and equipment insurance, under a 25-year PPP contract.