Mergers are needed in the REIC sector in order to attract more foreign investors, who, despite the strong interest in the Greek market, currently maintain small holdings in the sector.
The issue of acquisitions for REICs is returning. The latest step in this direction was seen in 2023, when Briq merged with Intercontinental International (ICI).
Since then, each REIC has followed its own path, in a market of course that offers strong returns. However, the sector essentially remains off the radar of major foreign investors.
On the one hand, the results of REICs' efforts to increase the dispersion of their shares are slow to come, while on the other hand the size of Greek companies remains small.
“Foreign investors view Greece positively. They are interested in the fundamentals of the economy and the growth prospects it offers. However, if one examines the listed Greek REIC sector as a whole, its total market capitalization amounts to about 2.3 billion euros. This is a size corresponding to that of a medium-sized or even small listed European REIC,” said yesterday Tasos Kazinos, CEO of Trastor.
Mr. Kazinos participated in an online discussion held yesterday by the European Public Real Estate Association (EPRA), the institutional representative of the European listed real estate sector. Also participating in the discussion were Anna Apostolidou, CEO of BriQ Properties, and Dimitris Papoulis, CEO of Trade Estates.
Then the CEO of Trastor stated that when an international investor considers the possibility of building a significant position in a company, as well as how they will subsequently be able to exit that position, limited liquidity makes it particularly difficult to place capital of substantial size.
“On average, the weighted free float of Greek REICs stands at about 20%, while in Europe the corresponding percentage is closer to 70%-80%. Therefore, when considering an investment, international investors assess both the size of the company and the level of free float,” the CEO stressed.
It is noted that in cases where a listed REIC in Europe has a free float above 70%, the percentage held by foreign institutional investors often exceeds 50% of the shares. In Greece, the percentage held by foreign funds in REICs often ranges between 6-10%.
Furthermore, Mr. Kazinos added that “when we discuss how we can create larger and more liquid REICs, one of the paths in this direction could be the consolidation of the sector.
“Mergers and acquisitions can accelerate this process, as organic growth requires more time, especially in the short-term and medium-term period, when raising capital through the issuance of new shares may lead to dilution of the holdings of existing shareholders,” he added.