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Invel brings York Capital into record Greek deal

Furthermore, PERE can reveal Chris Papachristophorou’s firm is poised to conclude a second investment in a pool of discounted loans in the UK.

Invel Real Estate Partners, the start-up real estate investment management business of ex-RREEF executive Chris Papachristophorou has closed on its acquisition of a two-thirds stake in Greek state-owned property company Pangea Real Estate Investment Company.

Combining equity from entrepreneur Benny Steinmetz’ investment group BSG and York Capital Management, another private investment firm, as well as its own equity, Invel has purchased 66 percent of Pangea in a deal valued at €653 million – understood to be the largest investment in Greek real estate history.

The company was acquired from the National Bank of Greece (NBG), which has been looking to raise capital to meet bail out conditions in light of Greece’s prolonged recession.

In a complex transaction, BSG is understood to have committed €110 million of the equity while York Capital has committed €125 million and Invel a further €15 million approximately. The remainder of the acquisition was debt, including financing by NBG itself.

Invel intends for Pangea to retain its own management with a view to doubling its €1 billion of assets, comprising 269 commercial properties and more than 1 million square feet in Greece’s main regions of Attica and Thessaloniki over five years.

According to Papachristophorou, the assets benefit from a strong tenant base and from long-term leases making the investment by Invel and its partners subject to both strong existing income and potential capital appreciation as the currently stagnant Greek property market recovers. Indeed, it is understood that the current portfolio commands rent of about €95 million a year.

Papachristophorou confirmed the rental income and that potential further funds raised would be used for more acquisitions, as would capital raised from the IPO of the Greek REIC in two years’ time.

“I do believe that markets like Greece that have gone through a prolonged recession with a lot of economic reforms are poised for recovery,” he told PERE. “Has the market reached the bottom? Nobody could call that but that’s where having a counterparty which is the largest bank in Greece and good quality portfolio comes in. It is centrally located, with good lease terms and that offers defensive qualities. We would not have gone to Greece to buy a weak portfolio.”

Papachristophorou further confirmed that Invel is on the cusp of concluding a second acquisition in the form of a loan book in the UK with a notional value of £140 million (€168 million; $230 million). The deal is expected to conclude next month.

Investing on a deal by deal basis in the first instance, he said he expected Invel to put approximately €300 million of equity to work per year and held a target of investing €1.5 billion over five years. The firm currently employs six staff but should increase to around 10 staff as deals materialise over the coming year, he said.