An article by Ioannis Orfanos, Arbitrage Real Estate:
A public offering underway, a second one commenced but was placed on halt after judicial intervention, ambitious investment plans in progress and under consideration, placements from institutional well-known funds, new companies under creation. Taking into account recent developments, one can discern that Real Estate Investment Companies (REICs) as an investment class (equivalent to global REITs) has become very attractive in the Hellenic Stock Exchange (HSE).
Whilst the Greek economy faces considerable challenges on the road ahead, the increased interest from institutional investors and hedge funds portends interesting developments for the future of the domestic REICs market. As an example the valuation being put on some core domestic commercial real estate assets has made REICs a compelling investment case for international institutional investors like Fairfax Financial Holdings Ltd (FFH), which is now focusing on Greece and betting that the worst has passed for the recession-battered nation.
“In terms of the economy, the last four or five years have been very tough for Greece,” Fairfax Chairman and Chief Executive Officer Prem Watsa said in a recent interview. “The economy has come down very significantly, unemployment is high. But on the other hand, we think that perhaps a bottom has been reached. He added that “the prospects in Greece will be very significant in the next five years, perhaps the next 10 years” without giving any forecasts.
To date, two REICs, NBG Pangea and Grivallia Properties, have managed to raise money as part of a share capital increase and are currently well placed to take advantage of domestic opportunities in core assets, including the country’s state-asset sales program, which comprises a large real estate portfolio with extensive sale and leasebacks prospects.
The domestic commercial real estate market has the potential to generate significant growth and the presence of big-hitting “long-only” mutual funds as anchor investors has triggered a scramble among hedge funds to get a slice of the action. And cash from non-domestic investors will continue to play a decisive role in the foreseeable future given the liquidity constrains of the local investment and credit markets.
You can find a recent overview of the 5 major domestic REICs by clicking here