Greece faces pressure to move real estate to foreign agency
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Greece’s international lenders will press Athens next month to transfer state-owned real estate to a holding company managed by the eurozone to spur flagging privatization efforts, officials said yesterday.
The plan, to be put to the Greek government by the troika of lenders — the IMF, the European Central Bank and the European Commission — in September, will propose creating a Greek-owned holding company outside Greece and run by foreign experts.
First suggested two years ago, the plan reflects growing frustration with Greece, which will probably need further aid and has made scant progress in reforming its public sector and selling assets.
Acting as a warehouse for property, it would seek to overcome Greek bureaucracy that has undermined the privatization program, agreed as part of a 240-billion-euro (US$320b) rescue. It will also ensure that the money raised will help pay off Greece’s debt.
“The main point is to maximize the value of state-owned real estate assets in Greece by making them more attractive for investors,” said a spokesman for the European Stability Mechanism (ESM), stressing that the plan had not yet been discussed by eurozone finance ministers.
“The benefit of privatization is to generate resources for Greece to help overall development and pay back its own debt faster,” said the spokesman for the eurozone’s bailout fund.
The idea of transferring assets to a Luxembourg-based holding company was reported in 2011. Luxembourg attracts multi-nationals seeking lower corporation tax and is home to other special purpose vehicles.
A Greek finance ministry official said the holding company would issue asset-backed bonds.
“It is under discussion to base the holding company in Luxembourg because it would be easier to run from there. It would be fully controlled by the Greek government,” the official said.
Under Greece’s bailout agreement, the ESM was to draw up a report on how to raise money from real estate assets not included in Greece’s privatization plan.
Athens screened for possible sale 81,000 real estate properties with an estimated value of 28 billion euros.
But Greek officials have rejected moving control of state property abroad.
This time, international creditors are eager to try to convince the centre-right government of Prime Minister Antonis Samaras as the country’s privatizations struggle.
Athens’ plan to raise 50b euros by 2016 was scaled back to 15b euros. Only 5b euros have been raised so far and the sale of the country’s gas utility flopped this year when the only bidder pulled out.
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