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Joining forces to regenerate property

The EBRD invested €71.5 million in a joint venture (JV) with Dimand, a leading Greek real estate developer and construction services provider with a 15-year record of successfully delivering brownfield regeneration projects. The JV invests in sustainable commercial real estate and hospitality projects in Greece, specialising in offices, mixed-use projects, student accommodation and city hotels.

Focusing on brownfield redevelopment, deep refurbishment and regeneration projects, this investment addresses Greece's need to reposition and carry out a deep-retrofit of its existing building stock in compliance with the country's climate commitments.

Seizing the opportunity for growth

The commercial real estate market in Greece has stabilised but remains depressed, with rents and property valuations down by approximately 30 per cent on pre-financial crisis levels. Given that the property sector in Greece may be at the bottom of the cycle , such entry valuations appear prima facie  attractive.

Since the 207-08 financial crisis there has been very limited construction activity in Athens and other regional markets and so there is a limited supply of Class-A office and other modern high-grade real estate. Many existing office buildings remain underinvested and may no longer meet the Class-A specifications. Against this background, the prime office market is expected to exhibit strong occupier demand, growing rents and, potentially, yield compression.

Other areas of growth include mixed-use commercial real estate, logistics centres and, in selected cases, hotels. The supply of assets that are underperforming and/or are in need of redevelopment is also significant.  Given the limited availability of capital, such properties can be acquired at attractive prices.

The EBRD saw an opportunity to partner with Dimand, a best-in-class local developer with a solid development and investment record. The JV benefits from Dimand’s extensive market knowledge and deal sourcing network, resulting in a strong project pipeline targeting less risky brownfield, mid-sized redevelopment opportunities, typically de-risked through forward sale contracts with strong investors.

Our impact/value added

In collaboration with the EBRD's Legal Transition Team, the JV and Dimand strengthened Dimand’s corporate governance structure in line with best practices. As a JV shareholder and through its representation on the JV’s board, the EBRD will contribute to greater compliance with international corporate governance and integrity standards, as well as promoting sustainability and environmental matters.

In addition, by integrating sustainability and resource efficiency into the investment concept, the underlying assets will become more attractive to prospective tenants and buyers, thus enhancing financial returns.

With Dimand, the EBRD is now promoting a higher level of sustainability reporting and risk management by helping the company to introduce Global Real Estate Sustainability Benchmark (GRESB  ) reporting . This will enable Dimand to better manage sustainability risks and gain insight into how best to capitalise on sustainability-related opportunities, such as lowering operating costs, meeting regulatory requirements and satisfying the developing preferences of corporate tenants. GRESB will also allow Dimand to get a clearer picture in terms of ESG performance, benchmark against other investors in the region and communicate sustainability performance to relevant stakeholders.

The EBRD is working with the JV to incorporate sustainability, climate resilience and resource efficiency as core elements of its business strategy, complying with the highest standards. All assets to be developed are expected to achieve a certification of ‘gold’ or above in Leadership in Energy and Environmental Design (LEED ),  or ‘very good’ in the Building Research Establishment Environmental Assessment Method (BREEAM ), showing that integrating advanced materials and state-of-the-art technologies achieves higher energy, water and material performance on a par with the greenest buildings in the European Union.

The EBRD’s successful partnership with Dimand places sustainability and resource efficiency at the heart of the JV’s business strategy, adhering to the best international standards while delivering stellar returns on invested capital.

Contact the EBRD Equity team to find out more

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