Weak global market conditions have prompted real estate investment company (REIC) Prodea to pull the plug on its 500 million euro share capital hike, pushing back the move to 2021. The Greek company, the country's largest REIC, has also delayed until next year a decision to sell its Picasso Fund, which includes 13 properties in Italy, in deals that were expected to deliver significant profits.
The properties are mainly office buildings in Milan and Rome, along with some stores, that cost 80 million euros but were valued at the end of last year at around 120 million euros.
Meanwhile, the company estimates that the properties facing the risk of a drop in revenues are its retail stores and hotels, which account for some 15 percent of total income. On the positive side, however, the country appears able to return to more normal conditions by the end of May, which means that the negative impact will not be longer than two months, company officials added.
If, of course, the 40 percent discount rate offered on rents is extended in support of retailers and hotels, then the possible impact on Prodea's revenue will be greater. In any case, in terms of rental income, a failure to collect any income from these assets in a worst-case scenario would result in losses of 10 to 15 million euros, out of total rents reaching 135 million euros (2019 data).
According to Aris Karytinos, chief executive at Prodea Investments, 40 percent of Prodea's rental income comes from building leased to National Bank, while other major tenants are the public sector (contributing 10 percent of income), supermarkets (10 percent) and Cosmote, which rents several Prodea's office buildings.
The real estate company does not expect to change its investment program, in terms of real estate development/reconstructions and acquisitions, which was launched before the outbreak of the pandemic. The company has secured more than 100 million euros for its investment plans.
At the same time, Prodea chairman Christoforos Papachristoforou said that new investment opportunities may arise due to the crisis amidst falling prices in a development that Prodea will aim to take advantage of to further boost its portfolio.