Vote of confidence in the local property market

The professional property market in Greece recently received a much-needed boost in Canadian investment group Fairfax Financial Holdings? acquisition of Lamda Development?s 14.78 percent stake in real estate investment company Eurobank Properties.

Fairfax had long been monitoring the Greek market and particularly the Athens-listed firm, having already acquired a small stake of under 5 percent in Eurobank Properties a few months ago. It could have made the move, which raises its stake to 19.12 percent, much earlier, but the unstable political situation until mid-June had delayed any decisions.

The local market currently offers some of the most attractive capital gains across the continent thanks to a considerable decline in prices. The Canadian group administers funds of more than $25 billion through a series of subsidiaries that invest in various financial products across the world.

The amount of 42.8 million euros that Fairfax paid at a price of 4.75 euros per share is seen by the market as beneficial for both sides. For an excellent price, thanks to the declining course of the bourse since 2010, Fairfax has gained access to a portfolio of 55 properties that fetch annual lease revenues of some 43 million euros. Had Fairfax made the same move in 2009, it would have had to pay much more than 100 million euros.

Lamda Development, for its part, will record net profits of 8.6 million euros compared with the valuation of its stake on June 30. Compared with the price of the stock in the session just before the announcement of the deal, the premium amounts to no less than 12 percent.

Property market experts consider this move by Fairfax as a vote of confidence in the local professional real estate industry, highlighting the favorable tax status companies such as Eurobank Properties enjoy as they are exempt from paying capital gains tax, property transaction tax, dividend tax or transaction fees for the purchase of investment properties.