The Real Estate Development Program:

Progress Achieved and the Way Forward

Andreas Taprantzis Executive Director

14th Prodexpo

Real Estate Conference

October 2013

Hellenic Republic Asset Development Fund

Contents

Objectives and Spill over Effect of the Real Estate Development Programme 1

Programme Implementation Process 2

3 Progress Achieved

The Way Forward 4

3

Objectives and Spill over Effect of the Real Estate Development Programme

Objectives of the Real Estate Development Programme

Create economic development by attracting foreign direct investments and generating side economic benefits for the real economy and society

Extract maximum value (financial proceeds) from this mass of properties, under prevailing market conditions, by matching potential demand to specific properties and by endowing properties with commercially exploitable features

Use real estate for financial leverage

Objective 1

Objective 2

Objective 3

4

Objectives and Spill over Effect of the Real Estate Development Programme

Spill over Effect of the Real Estate Development Programme

The Real Estate Development Programme is expected to have a strong positive impact on the overall economic development of Greece

Decrease of debt by the use of upfront proceeds 1

Macroeconomic effects as a result of private investments 2

Enhancement of infrastructure 3

• Repositioning of strategic sectors of Greek economy (tourism, energy, etc.) • Strengthening of construction activity over a long time horizon • Increase of employment opportunities • Strong regional impact as investments are spatially distributed

• Regional development and improvement of infrastructures (transportation, health, energy, environment and services)

5

Targets and Spill over Effect of Real Estate Development Programme

Financial Impact Analysis

Impact on GNP Impact on Employment rates

Real Estate Development Programme may have a significant impact on GNP and employment rates as a result of the new private investments

Private investments are expected to amount to 0.9% of GNP in 2013

In year 2016 private investments shall increase by 1.42% of GNP

GNP is expected to increase by 2% by year 2020 as a result

of the offer of investment products in combination with the

increase in private consumption

GNP shall remain higher than 3.2% as compared to base

year for a period of 10 years.

140.000 new job positions shall be created as a result of

investments and the increase in private consumption.

At the end of the programme, employment rate shall have an

increase of 2%, as compared to base year.

Contents

Objectives and Spill over Effect of the Real Estate Development Programme 1

Programme Implementation Process 2

3 Progress Achieved

The Way Forward 4

7

Programme Implementation Process

Implementation Phases of the Real Estate Development Programme

Prescreening of 80,000 properties

Technical and Legal Due Diligence

Preliminary Market Sounding

Objective of each individual development Maximum Value = Proceeds + economic value of investment

Pre-selection of 3,000 most valuable properties based

on predefined criteria

Flagging of properties prescreened but not

selected during the first phase of the programme

Property Maturity Plan “Special Zoning Development

Plan” – “Strategic Environmental Assessment”

Tender procedure

Properties that require maturity Plan

Contract award

Development of legal framework for the transaction (i.e. sale,

concession, surface right)

Development of Hellenic Republic

Real Estate Database

Phase A

Phase C

Phase B1

Phase B2

Contents

Objectives and Spill over Effect of the Real Estate Development Programme 1

Programme Implementation Process 2

3 Progress Achieved

The Way Forward 4

9

Legal status

Progress Achieved

Phase A: Pre-selection of Real Estate Assets

3,000 preselected properties

Pre-estimated value: €9bil.

Size

Maturity

Location

80,714 properties belonging to 30 different public organizations

1,000 properties to be transferred to HRADF

Pre-estimated value: €4.5bil.

In addition to location and property size, the selection process was based on the following criteria: Lack of significant restrictions Existing infrastructure favoring property development (existence of network,

accessibility) Local population

Market needs

Special-type properties (i.e. military facilities, islands, infrastructure) and properties with social or communal uses were excluded from the selection process

Profile of preselected properties 76% of Pre-selected Properties are land plots, 13% are land plots with buildings and

11% are buildings About 60% of Pre-selected Properties are “non-urban” properties and 25% are

“seaside” properties 20 % of Pre-selected Properties (630 properties) represent 83 % (€ 8.5 billion) of the

total pre-estimated value

595 properties have already been transferred to HRADF The remaining properties will be transferred to HRADF by the end of 2013

10

Progress Achieved

Phase B1: Technical and Legal Due Diligence

Α. Legal Due Diligence

Examination of current legal status and potential legal issues of the property

Identification of legal issues that hinder the property development

Analysis of potential solutions to current legal issues

Estimation for effective resolution of open legal issues within the set timeframe

Β. Technical Due Diligence

Analysis of actions and interventions required in order to achieve property maturity

Identification of technical issues that hinder or have a negative effect on the

property development process

Analysis of potential solutions / ways to overcome current technical issues and /

or restrictions

Preliminary estimation with regards to alternative potential development plans

for the property

11

Progress Achieved

Phase C: Exploitation Strategies for Real Estate Assets

HRADF applies three options for the exploitation of real estate assets aiming at the maximization of the economic benefit to be achieved

One or two-phase international tenders according to the property size 1

E-auction: development of a dedicated electronic platform allowing the marketing of public properties as well as live and fully transparent electronic auctions

2

Securitization of real estate assets 3

• Exploitation of properties with estimated value < €5 million • Operation and administration of e-platform by ETAD S.A. • Promotion of clusters of assets (e.g. urban properties, seaside properties, etc) • The first e-auctions of properties were performed in July 2013

• Preparation of appropriate structures for the monetization of future proceeds from the exploitation of 1,000 properties within 2013 and implementation thereof in Q1-Q2 of year 2014

• Gradual transfer of 1,000 properties to HRADF by 31/12/2013 (250 per quarter)

12

Phase C : International Tenders

Progress Achieved

2011-2012 • Focus on properties defined in the mid-term Fiscal Adjustment Strategy with emphasis

on urban / commercial properties (quick wins)

2013

• Identification of clusters with the aim to promote similar properties in the framework of the same tender process (e.g., Xenia Hotels, Thermal Springs)

• Enhancement of the effort to promote large properties in touristic areas (e.g., Chalkidiki, Ermioni)

• Diffusion of focus in many geographical areas and various markets, e.g. Attica, Rhodes, Corfu, Chalkidiki, Central Greece, Peloponese and abroad

2014 onwards

• Enhancement of the effort to define clusters of properties based on geographical criteria (e.g., Plaka properties) or on their development potential (e.g., properties for Golf, properties for hotel and vacation home development)

• Focus on landmark properties (e.g., Hellinikon, Prasonisi)

13

Progress Achieved

Phase C: e-auction Platform

Development of a unique portal which allows for the fast exploitation of small- to medium-sized properties

Properties with a pre-estimated value up to €5 million

Properties that are ready for sale or lease and no maturity needs or Special Zoning Development Plan is required for their further exploitation

The development of the e-auction platform aims to:

Create an electronic marketplace which will promote all properties ready for sale or lease

Provide to interested investors all essential information for each property ready for sale or lease

Provide the opportunity to interested investors to transact from any distance with full transparency, without red tape

Maximize State’s profits by bringing in motion a significant number of mostly unutilized and abandoned properties

14

Progress Achieved

Phase C: Securitization of Real Estate Assets

HRADF is currently assessing different options to monetize the total cash flow stream that is expected to accrue in the coming years as a result of its on-going process of preparation, marketing and sale of its real estate asset portfolio.

The monetization strategy should encompass a portfolio of about 1,000 assets to be transferred to HRADF (on-going process).

Within this context, HRADF has already selected global Financial Institutions as advisors to

i) Evaluate options to accelerate the monetization of the real estate portfolio and formulate different structures to facilitate the disposal of properties transferred to HRADF (Phase A) and

ii) execute the preferred options and complete the monetization (Phase B).

Phase A is expected to be completed by the end of 2013.

First transaction (Phase B) is planned in 2nd quarter of 2014.

15

Progress Achieved

Statistics

3,000 preselected properties

Site visits conducted for 1,200 properties

595 properties transferred to HRADF

Technical and legal due diligence conducted for 428 properties

40%

c. 50%

72%

16

Progress Achieved

Statistics

245 properties eligible for further exploitation

Tender concluded for 19 properties grouped into 8 projects

Tender in progress for 53 properties grouped into 6 projects

Tender under preparation for 127 properties

Electronic auction concluded for 7 properties, 39 properties in the pipeline

17

Phase C: Tenders concluded

Progress Achieved

During the last nine months (Jan-Sep 2013) tender process has been concluded for eight projects with total revenues amounting to about €160 million

International Broadcasting Center Financial offer: 81M€

Kassiopi area, Corfu island Financial offer: 23M€

Camping & Xenia Paliouri Financial offer: 14M€

Five properties located in London, Brussels, Belgrade, Cyprus and Tashkent Financial offer: 42M€

18

Phase C: Tenders in progress

Progress Achieved

Tenders in progress with estimated revenues in excess of € 1 billion

Astir Vouliagmenis Sale & Repo (28 Buildings)

Afantou, Rhodes

Xenia Hotels St. Ioannis, Sithonia Peninsula Thermal springs

Hellinikon

Contents

Objectives and Spill over Effect of the Real Estate Development Programme 1

Programme Implementation Process 2

3 Progress Achieved

The Way Forward 4

20

The Way Forward: Real Estate Reforms

Management of private state-owned properties by a single organization (PPCo S.A.)

Hellenic Tourist

Properties S.A.

Hellenic Public Real Estate

Corporation

Public Properties Company

S.A.

Real Estate Portfolio managed by PPCo S.A. • 12 Olympic venues, which were constructed for

the Olympic Games “Athens 2004 • 277 tourist properties including Xenia hotels, ski

centers, marinas, golf courses, camping sites, • 71.000 properties owned by the Greek State

Benefits achieved • Single property registry for the majority of state-

owned properties • Common management and administration

structures and processes for all state-owned properties

• Single point of contact for all requests and issues concerning state-owned properties

• Optimal coordination of activities related to the exploitation and development of properties

21

The Way Forward: Real Estate Reforms

HRADF has contributed in the introduction of important amendments to current legislation

Town Planning Issues

• New land use under the title “tourist village”

• Extension of the surface right from 80 to 99 years for residential developments

• Gradual completion of infrastructure works

• Joint ESCHADA by HRADF and Private Properties (e.g. Astir Properties for the property in Astir Vouliagmeni

Operational Issues

• One stop shop for the issuance of operating licenses (NTO)

• Use of shoreline and the beach for the development of new or the exploitation of current tourist marinas

• Direct concession of the use of the shoreline and the beach for 50 years to the investor for seaside properties

Other Issues

• Permission to Real Estate Investment Companies (REICs) to invest in residential buildings and land plots

• Permission to REICs to invest in surface rights and long-term commercial concessions

• Amendments to existing regulations on surface right

• Simplification and acceleration of expropriation process

Real Estate Reforms passed by law

1 2 3

• Regulations related to building restrictions for forest areas

• Regulations related to tax imposed on “real” off-shore companies that own real estate properties

• Modifications in the hierarchy of urban and spatial planning designs

…. and more to be finalized by the end of 2013

22

The Way Forward: Targets

Expected Revenues (2013-2022) for 1,000 properties

• 8-10 tenders launched on an annual basis

• Average project size: €15 million

• Average project duration: 10-12 months

International Tenders

• The aim is to achieve revenues of approximately €30million/year through the electronic auctions of real estate properties

E-auction

Monetization

• 3 issues in the period 2014-2016 raising EUR 1.2 billion

• Annual payments from real estate accruals and part of the issue

23

The Way Forward: Need to further expedite the process

Necessary Reforms: Planning vs Reality

Typical Project Timeframe The IBC Project Case

Task performed by HRADF

Task performed by other public entities

24

The Way Forward

1. Simplification of ESCHADA process before submission to the Council of State

2. Creation of investor-friendly tax environment

3. Better coordination of legislative initiatives related to public real estate properties

Thank you for your attention

14th Prodexpo

Real Estate Conference

October 2013

Hellenic Republic Asset Development Fund