Greece's biggest bank is to test the market for selling real estate non-performing loans (NPLs) by launching a €1.3 bn portfolio sale.
Piraeus Bank has appointed UBS to advise and it has begun approaching potential buyers about the portfolio, comprising real estate assets and hotels, and code-named Project Amoeba.
Amoeba is the first attempt at a large property NPL sale in the country since the financial crash plunged Greece into economic crisis, leading to multiple bailouts from the International Monetary Fund and European Central Bank.
As a result, its banks have lagged behind all others in Europe in dealing with their €101 bn mountain of bad loans. Bank of Greece data shows NPLs account for about half of all loans on their balance sheets.
About €27 bn of the NPL debt pile is secured on real estate mortgages but up to 60-70% is probably collateralised by real estate in some way, according to Tassos Kotzanastassis, managing director of 8G Capital Partners, an adviser on the Greek market. ‘Greece’s banks are overloaded with real estate,’ he said.
Greece has set an ambitious debt reduction target of 40% by the end of 2018, he added, through a combination of sales, writedowns and liquidations.
Piraeus Bank’s new chief executive Christos Megalou has agreed on a restructuring plan for the lender, which includes offloading €4 bn of sour loans by the end of 2017.
Piraeus will be hoping signs that the Greek property market has hit the bottom and is in the early stages of recovery will attract opportunistic investors.
A number of international investors have moved into Greek property this year, either via investing in listed property companies or buying real estate, including Värde, Henderson Park, Hines and Pimco.
Sources say Pimco is eyeing the majority stake in Pangaea Real Estate Investment Company, Greece’s largest listed property firm. The shares are owned by companies of mining and real estate investor Beny Steinmetz, who was questioned last month by Israeli police in connection with a fraud investigation, but has not been charged with a crime.
Pimco already has a stake in Greece’s second largest property firm, Grivalia Properties REIC.
