NPLs secured on properties to be conceded in bulk to funds, REICs

The banks’ bad-loan portfolios are estimated to contain properties worth some 4-5 billion euros that could fetch handsome returns for real estate investment companies (REICs) and foreign and domestic funds that invest in them as they seek out opportunities in the local property market.

This was the opinion of the property market professionals who addressed Tuesday’s 7th Executive Leaders’ Meeting in Athens, organized by Prodexpo. Today bad loans are estimated at 50-55 billion euros, while bank officials, including Piraeus Real Estate managing director Giorgos Kormas, stated that 90 percent of those loans are secured on properties.

However, given the pressure that banks are under to rapidly reduce their nonperforming loan stock, it is certain that the bulk of the properties used as collateral for unserviced loans will be conceded directly to investment funds.

“Banks are now deprived of the luxury of time to go through their loan portfolios and identify the properties that are appropriate to be put up for sale on the market,” said Georgios Poimenidis, chief executive officer at Alpha Astika Akinita. Therefore, in the words of Dimitris Andritsos, CEO of Eurobank Property Services, “one of the possible solutions is for those loans to be acquired by funds, which will then start selling the properties at their own pace.”

Kormas also referred to another issue banks have put to the government, which is the reduction to the absolute minimum of the number of new properties coming under the lenders’ control from auctions that end up without a result. The aim is to avoid the major cost that dealing with those properties entails ahead of their return to the market for sale.