The utilization of his loans Recovery Fundthe investment in its sectors real estate market with high demand and rents, managing operating costs and adopting tools to manage them interest rate riskmake up the strategy mix that investment firms follow today in Real Estate (AEEAP).
As reported by the heads of five companies in the sector at the 4th Institutional Management Conference, held by Association of Institutional Investorsthe AEEAPs focus on the compensation of the investment risk, which has arisen due to the high interest rates and to a lesser extent also the inflation.
As characteristically mentioned by Aris Karytinosits CEO Prodea Investments, “the current situation is unprecedented for our country, as we have much lower inflation than other Eurozone countries, but like them we are called to operate in an environment of very high interest rates. At the same time, real estate prices in Greece have not decreased as they have abroad, with the result that we are not particularly attractive as an investment destination for someone who invests in the international markets”, noted Mr. Karytinos. At the same time, he emphasized the fact that this very maintenance of prices at a high level ultimately limits transactions, as there is a significant distance between the expectations of sellers and the possibilities – desires of buyers.
According to Tasso Casinoits managing director Trastor AEEAP, “we have to focus on cash flow, that is the amount of rents, the cost of borrowing and our operating expenses, in order to limit the consequences of the increase in the cost of borrowing. In this context, the AEEAP are turning to the construction of new and green buildings, which register a high demand. Also, moves are being made to reduce the cost of borrowing, such as interest rate risk hedging tools, lower leverage and lengthening the duration of borrowing.”
Another important “tool” used by companies concerns the loans they can secure through the Recovery Fund, which offer particularly favorable terms and cover costs related to energy upgrading and environmental protection. As pointed out by Anna Apostolidouits managing director Briq Propertiesin this period the company is proceeding with the construction of a green office building in L. Poseidonos, having secured a loan from the Recovery Fund with an interest rate of only 0.35%, for 50% of the total cost of building the property.
Accordingly, the Noval Property of of Viohalco group moves methodically in the real estate market, focusing on developments of existing properties (which also allow a higher return), green investments, but also emphasizing the management of the company’s capital structure. “70% of our borrowing concerns a fixed interest rate, thanks also to the bond we issued. At the same time, we have added a lot of sustainability to our investment policy, with buildings that have a flexible design and resilience in the future, as the requirements of environmental legislation and tenants are constantly changing”, said Panagiotis Kapetanakos, managing director of Noval Property. The company is currently developing the first office building, which will be energy independent from carbon (low carbon).
In turn, Mr Dimitris Papoulisits CEO Trade Estates, noted that “to offset the increase in construction costs and interest rates, we have chosen to accelerate the acquisition of income properties. We have also hedged 60% of our interest rate risk, limiting it below 3.3%, while we include most of the development projects in the Recovery Fund, with borrowing costs that do not exceed 3% in total.”
