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Risk profile of real estate leasing present and future

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					  Real Estate Leasing in Greece – Piraeus Leasing Experience

Speaker:
Yiannis Mavrelos, Managing Director
                      Piraeus Leasing and Piraeus Bank

   Piraeus Leasing
      Greek leasing market prime player
      100% subsidiary of Piraeus Bank - total assets €1.2 bln - 65% real estate
      Small credit expansion (5%) during 2008- projections for zero growth in 2009
      Funding through Piraeus Bank which has a broad depository basis
      Recently concluded a securitization issue of AAA receivables

   Piraeus Bank
      A major Greek bank with market capitalization approximately €4 bln and total
     assets €50 bln
      Operates in several markets outside Greece, like Bulgaria, Romania, Ukraine,
     Albania, Serbia, the UK, the USA and Egypt
                           The Greek Leasing Market


   Total capital outstanding amount

      increased 10% during the 2008, reaching € 8.5 bln

      in 2009 zero growth is anticipated

   4 major leasing companies (amongst them Piraeus Leasing) hold 65% market share

   15 leasing companies, all of them subsidiaries of banks

   Real estate leasing 60% of total market activity (direct leasing & sale and lease
    back)
                          Real Estate Leasing Products

   Refers only to properties that serve commercial purposes (shops, malls, office
    space, clinics, hotels, warehouses, factories) - not residential property

   The lessee is usually a company but individual professionals can also be lessees

   Direct Leasing – Sale & Lease Back

   All property leases are financial leases

   Minimum 10 year term – average 13-15 years

   Rentals are tax exemptible for their portion which refers to the building

   Public sector has not yet utilized real estate leasing
                          Real Estate Market Situation


   Economic downturn (luck of liquidity - fall in economic activity) has affected real
    estate market

   Pressure on property prices and therefore on the leasing companies that own and
    lease the assets.

   Spiraling effect which pushes prices further down.

   Greek market peculiarities helped the property crisis to be contained

   Fall of prices in Greek commercial market about 10% of their highs

   A further 5% - 10% fall of values may be realized, especially for the commercial
    sector
       Risk profile of real estate leasing, present and future (1/2)

   The real estate leasing part of Piraeus Leasing portfolio, has behaved relatively well

   Real estate NPL’s are below total portfolio average which is less than 6%

   Recoveries from real estate exceeding 75%

   Repossessed properties for resale or release are lower than 2% of the relative
    portfolio.

   New business

      restrained growth due to strengthened eligibility criteria and weak demand

      lower maturities - higher spreads – LTV <70% - projected cash flows should
       secure at least 120% of rental obligation
        Risk profile of real estate leasing, present and future (2/2)

   Increasing difficulty in repossessing the properties because lessees exhaust the
    legal means they have.

   In viable cases

      restructuring of the lease

      temporary reduction of rentals

      transfer of the property to a new buyer or lessee by mutual consent


   In 2009 new business will just cover the repaid capital of the existing portfolio

   In 2010 a credit expansion up to 5% could be feasible

				
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posted:10/10/2012
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