Lamda Development to spend 2.1 billion for Hellenikon

After months of deliberations, it’s finally official. The improved financial offer by Lamda Development for the Hellenikon project was officially approved today by the Hellenic Republic Asset Development Fund (TAIPED). In an announcement earlier, TAIPED mentions its “Board of Directors responded to the €915 million offer made by the consortium led by Lamda Development for the acquisition of the 100% of the shares of Hellenikon SA”.

This is undoubtedly one of the biggest investments in the history of Greek business and one of the largest urban reconstruction projects in Europe. According to the TAIPED press release, an amount of 33% of this consideration will be paid upon completion of the agreement and the rest will be deferred within 10 years according to the terms of the relative contract. The company submitted a clearly improved financial offer, 25% higher than its initial offer, which exceeds the evaluation set by the Independent Appraiser (American Appraisal).

The consortium undertakes an investment of €5,7 billion, out of which €1,25 billion correspond to the necessary infrastructure costs and the metropolitan park, which will be exclusively assumed by the company. This investment plan is covered by penalty clause in the SPA. It is noted that the financial offer does not include the expected proceeds from the 30% earn out clause, in case that the IRR of the investment will be higher than 15%.

In accordance with the tender process the Financial Advisers (Citigroup, Piraeus Bank) assisted by the specialized adviser of TAIPED, Happold Consulting, will deliver a fairness opinion on the improved financial bid, according to internationally accepted standards and evaluation models.

The Board of TAIPED will review the above, as well as the recommendation of the Council of Experts and will decide within the coming days if a Preferred Bidder can be declared. After the completion of the tender process, a press conference will be held.

According to reports, apart from the original cost, there will be additional investments with further developing benefits for the Athens and the country’s economy. It is estimated, that through the duration of the real estate development, the areas of Hellenikon and Agios Kosmas will be attracting added value investments worth over 7 billion euros. During the project development and its subsequent operation, approximately 50,000 new jobs will be created. Additionally, a recent research showed that in the next 10 years, the country’s GDP will rise by 1.2% because of the project.

It is also expected to redefine Athens as a tourist destination, a business center and a recreation hotspot in the wider eastern Mediterranean area. Essentially, the Hellenikon project is the most complex and ambitious urban redevelopment project in Europe and it is expected to send a strong message to the international community (foreign media, EU partners, international markets), that Greece is radically changing and is now an attractive investment destination.

Concerning the estimated revenue of the Greek state, taking into account the total cost of infrastructure, the metropolitan park and the price of buying the shares of Hellenikon SA, the total amount is close to 2.2 billion euros. Divided by the 2,500 acres of the developed land, it amounts to more than 850 euros per square meter. Divided by the acres of land which will be in construction, the price is even higher – close to 2,200 euros per square meter. That is why the improved Lamda Development offer more than covers the estimated state revenue set by the independent appraisers.