By the end of 2024, the merger of Briq Properties with Intercontinental International SA (ICI) is expected to be completed, almost two years after the deal with Ajolico Trading Ltd, ICI's main shareholder.

As Briq's CEO, Anna Apostolidou, told Briq's extraordinary general meeting, "it was not a simple transaction as additional settlements needed to be made on some of ICI's old properties".

THE THREE PHACES

• The first phase of the deal involved the purchase of 16 properties +1 more property in June 2024 (on Vouliagmeni Avenue) from ICI for €60.58m through a loan at an interest rate of 4.5% (1.5% +3% Euribor)
• The second phase involved the purchase of 27.02% of ICI shares from Ajolico Trading Ltd for €9.35 million, i.e. at a 15% discount to the NAV of 30/6/2024 (€10.98 million)
• The third and last phase "in progress" concerns the absorption. A shareholder exchange ratio is proposed, whereby ICI shareholders will receive 1.194444444444444 new shares issued by Briq for every 1 ICI share held. The total number of shares in the consolidated company after the transaction will be 44,885,774

BEFORE AND AFTER

• Property value: €283 million from €148.9 million.
• Number of properties: 59 out of 25
• Portfolio size (in sqm): 200,7 thousand from 147,8 thousand.
• Annual rental income: €21 million from €10.6 million.
• Gross portfolio yield: 7.6% from 7.4%
• Debt: €133 million from €37.1 million.
• Loan to value: 47% from 24.9%
• Net loan to value: 44.7% from 23%
• Average cost of borrowing: 4.5% from 5.6%

TOP REAL ESTATE 

The 8 largest properties by value account for 46% of the total.

INCREASE IN DISPERSION

Regarding the geographic diversification, Ms Apostolidou said that while at the end of 2023 the company's portfolio was at 85%, after the merger it will be as follows:

• 68% in the Attica region
• 18% in the tourist islands (Crete, Zakynthos, Corfu and the Cyclades, and more specifically, Paros and Tinos)
• 14% in other major Greek cities 

Regarding tenant dispersion, prior to the deal, Quest and Sarmed Logistics leased a total of 61% of the property portfolio, while after the completion of the merger, the two aforementioned companies together with Alpha Bank will have a total of 54%, while generally no tenant will give an income of more than 26% of total revenues.

REDUCTION OF COSTS

Management is placing particular emphasis on cost reduction, with the deal 'promising' operating cost savings of EUR 1 million per annum 

In terms of some key ratios of interest to Briq, the cost-to-revenue ratio will be below 19% when competitors' ratios range from 23.4% to 60.3%. Also, the operating expenses to investment property ratio will be below 1.3% when other companies in the industry show ratios of 2% to 3.4%, which from others subtract from yield 2-3.4%.

STRATEGY

Following completion of the deal, management will focus on the 34 properties Briq has added to its portfolio, seeking to maximise the potential of each property.

It will consider selling some properties that are not strategic for the company (both Briq and ICI) at prices higher than the acquisition prices and will not consider at least in 2025 some AMC to reduce debt. At the same time, certain properties will be upgraded, with the company utilizing funding from the Recovery Fund.

In terms of projects that are "underway", the Aspropyrgos development is being completed with management considering other developments in the area. Work is still ongoing on a building that the company acquired in Kallithea (at the height of Poseidonos Avenue) during the crisis (2017) at a very good price (around €1m), with the aim of converting it into an office complex, which is expected to be completed in early 2026.