By Stelios Orphanides
The recent acquisition of three properties from the Shacolas Group appears to be connected to the creation of a company that will manage commercial properties likely to be announced by Bank of Cyprus in the coming days.
There is reasonable cause to assume that the sale of the properties, “is part of the creation of a real estate portfolio for a Cyprus Stock Exchange (CSE) listing, Yiannis Telonis, a former senior manager at Hellenic Bank said in a telephone interview. “Because they are large chunks, their value is timeless and will offer significant return”.
The largest Cypriot bank’s chief executive officer, John Hourican, said on November 21, that as part of the lender’s efforts to reduce non-performing loans it was planning to register the real estate fund as an alternative investment fund (AIF) as part of a listing on the Cyprus Stock Exchange.
On February 8, Woolworth (Cyprus) Properties, a member of the Shacolas Group, announced the sale of the Shacolas Tower on Ledra Street, the Super Home Center (DIY) department store in Strovolos, and Debenhams Apollon in Limassol, for a consideration of a €44m.
A source said the fund, that will manage assets worth €190m, will be a “self-managed” company seeking to create revenue from the administration of commercial properties.
Participation in the fund will be restricted to “institutional and other well-informed investors” and as its share will not be traded to retail investors, no prospectus issue is planned, the source said.
“The fund will manage a certain amount of properties and as things stand, it is not going to buy other properties,” the source continued, adding that profit for investors in the fund will result both from the revenue from leasing the buildings as well as via capital gains from the sale of administered properties.
“Bank of Cyprus’s business is not property management and the reason behind their acquisition is related to certain (loan restructuring) arrangements,” the source said. The bank’s stake in the fund will show in its balance sheet as a participation in a subsidiary and not as illiquid real estate assets.
The bank is struggling with a non-performing loan mountain of €9.7bn or half its loan portfolio.