Greece’s plan to raise billions of euros from state-owned land may fail if the government succumbs to pressure to keep assets in public hands, according to Miltos Kambourides, managing partner at Dolphin Capital Partners.
Finance Minister George Papaconstantinou said in an interview this month that he would prefer to offer developers long-term leases, though he’d consider selling smaller assets outright. On March 23, the government said it will give details of the fundraising plan “in the coming weeks.”
“No foreign investors will want to buy a lease and be told what they should develop on the site,” said Kambourides, 38, who helped set up his private equity firm seven years ago. Dolphin, registered in the British Virgin Islands and listed on the London Stock Exchange’s AIM, is developing seven luxury resorts in Greece with a total investment budget of 2 billion euros ($2.8 billion).
Papaconstantinou aims to generate 50 billion euros from state asset sales and property transactions by 2015 to reduce Greece’s public debt, the highest in the European Union as a percentage of gross domestic product. Until now, its governments have shied away from real-estate divestments to avoid criticism from voters.
‘No Panacea’
“Asset sales are an important element in the effort to stabilize the debt level, though they’re unlikely to be a panacea,” said Silvio Peruzzo, an economist at Royal Bank of Scotland Group Plc based in London. He described the government’s target as “very ambitious.”
Greece’s economy will probably shrink for a third year under the force of cost-cutting measures that followed an EU- led, 110 billion-euro bailout last year.
Some companies may be discouraged by the country’s bureaucracy, said Kambourides, whose company had to collect 2,200 signatures from government departments and ministries to secure the luxury developments. There’s no single point of contact for the numerous permits needed, he said.
“It creates a high barrier to entry, which keeps the competition away, but it’s not good for the country,” Kambourides said.
Greece is taking steps to promote large-scale developments, such as speeding up the permit process and defining holiday homes as a tourist product so developers can build them on resorts.
New Legislation
“The government’s moving in the right direction in terms of introducing legislation, but it’s going slowly,” said Christopher Egleton, executive chairman of Minoan Group Plc (MIN), a London-based developer of leisure and tourist resorts in Greece.
Dolphin, which has bought 1,650 hectares (4,077 acres) of land in Greece for development since 2006, won’t purchase any land from the state unless it’s a freehold, Kambourides said.
“The government’s sending out mixed messages, though I think it will find a way to respond to the needs of investors,” said Yannis Perrotis, managing director of Athens-based CB Richard Ellis Atria. His company, an affiliate of the world’s largest commercial property brokerage, advises on transactions in Greece and Cyprus.
Dolphin’s property-investment unit, Dolphin Capital Investors, is building resorts at sites including Porto Heli on the shores of the Peloponnese and Plaka Bay on the island of Crete cash advance no faxing.
Holiday Homes
“Holiday homes are the most profitable part of a resort and that is what all investors are looking for,” Kambourides said. He estimates that as many as 25,000 holiday homes could be sold in a year. That would generate sales of 10 billion euros and provide a “significant” boost to gross domestic product.
A Feb. 27 poll by MRB Hellas showed that 58 percent of respondents wanted state land to be developed, not sold. Of that number, 66 percent supported laws that would stop any sale of public land. Prime Minister George Papandreou said on Feb. 15 that he would propose such a ban.
“The Greek people want to have their cake and eat it too,” Kambourides said. “They have a wrong concept of ownership, as if the land sold will be taken to another country.”
Most developers prefer to buy sites on a freehold basis because it enables them to build homes that can ultimately be sold outright, Perrotis said.
Public Access
Land sold by the state would remain accessible to the public, according to Kambourides. Investment attracted by the sales will create jobs and lift the economy after Greek unemployment reached 14.2 percent in the fourth quarter, the highest since the introduction of the euro.
The Hellenic Public Real Estate Corporation, the state’s property-management arm, has already announced that 20 plots of land, including some on the Aegean island of Samos and the port of Lavrio, will be offered for development and “ownership will remain with the Greek state.”
Kambourides began his career at Goldman Sachs Group Inc. (GS) working on real estate and private equity transactions in the U.K., France and Spain. He went on to become a founding partner of Soros Real Estate Partners before setting up Dolphin.
“The value is definitely there,” Kambourides said. “It’s more a matter of the government’s ability to carry out an orderly sales process.”
Property Disputes
The state still has some work to do: Greece is the only country in Europe without a centralized registry of deeds. About 40 percent of registered state properties are disputed and an additional 25 percent don’t have enough data on their legal status and are “questionable,” Papaconstantinou told lawmakers earlier this year.
The cumbersome approval procedures and competing claims over land resulting in lengthy court battles are both factors that have deterred foreign investment. Jones Lang LaSalle ranked Greece 29th on its Global Real Estate Transparency Index for 2010, below Spain, Italy and Portugal.
“The government still has to prove it can apply the new legislation,” Kambourides said, “‘Foreign investment will be harder to attract without a proper land-usage plan and a completed land registry.”
A merger of the companies that run the Toronto and London stock exchanges may face powerful opposition from four of Canada
Liquor company Brown-Forman Corp. is reporting a 30 percent rise in its third-quarter profit, led by surging international sales and a strong showing by its flagship Jack Daniel’s brand.
The results beat Wall Street estimates and the company is also raising its full-year earnings outlook.
The maker of Southern Comfort reported net income of $140.7 million, or 96 cents per share, in the three months ending Jan. 31 no teletrack payday loan. That’s up from $107.9 million, or 73 cents per share, a year earlier.
It says net sales for the quarter rose 12 percent to $962.4 million.
Analysts surveyed by FactSet expected earnings of 86 cents per share on revenue of $881.9 million for the quarter.
Amid the reams of census data released Thursday showing an unexpected population loss in St. Louis, perhaps no detail was more striking than this:
In a belt of neighborhoods across the near south side, places around Tower Grove Park and Benton Park that have seen countless homes rehabbed and new businesses open in the last decade, the number of actual residents declined by at least 10 percent.
In Tower Grove East and Shaw, Fox Park and McKinley Heights, population fell faster than the city as a whole. The south side contributed almost as much to St. Louis’ 8 percent population drop as did the continuing exodus up north.
The difference is that while people have flowed out of north St. Louis for decades, many of these south city neighborhoods have in recent years seemed to rebound, acquiring the trappings of urban revitalization, from coffee shops to kickball leagues to parents pushing strollers.
It’s a reminder that progress and population growth don’t always move as one and also that the challenges facing a city still struggling to grow again
Drivers, check your mailboxes.
Toronto will be mailing out refund cheques to anyone who paid the now-scrapped personal vehicle tax in advance for 2011.
The first batch of cheques will be sent out Friday, the city says.
The much-hated tax was axed by city council Dec. 16, 2010, after Ford promised to do away with the fee during his campaign. But the end of the tax didn
General Electric says its oil and gas business has reached a deal to buy the John Wood Group’s well support division for about $2.8 billion.
GE says in a statement Sunday that the deal must be approved by Wood Group’s shareholders. It’s expected to close later this year.
The well support division makes electric submersible pumps, wellhead pressure control systems and information logging systems.
It has 3,800 employees and more than 20 factories and service centers across the world. Last year it reported $947 million in revenue.
GE says the deal makes it a key player in the oil recovery business by adding submersible pumps.
Australia marshaled 4,000 troops and sent a supply ship with tons of food to its cyclone-stricken northeast coast Friday, as awe-struck residents in wrecked towns confronted debris that included boats tossed into neighbors’ yards.
Authorities confirmed the first death from the storm that slammed into the coast early Thursday and said a search was under way for two missing people.
Cyclone Yasi destroyed dozens of homes and ripped roofs and walls from dozens more. It cut power supplies in two regional cities and laid waste to hundreds of millions of dollars worth of banana and sugar cane crops.
“I just hope we don’t get forgotten,” said Lisa Smith, whose house had part of its roof torn off in the hard-hit, seafront town of Cardwell. She complained that state and federal officials had not yet given her remote community any substantial help.
Residents and officials were amazed that the death toll was not higher. The storm whipped the coast with up to 170 mph (280 kph) winds and sent waves crashing ashore two blocks into seaside communities, as tens of thousands of people huddled in evacuation centers.
Power supplies and phone services were gradually being restored Friday, and roads cleared of downed trees and other debris. The efforts were hampered by drenching rain in many parts of the disaster zone, prompting the weather bureau to warn of potentially dangerous flash flooding.
In Cardwell, rain pounded down Friday on already inundated homes through gaping holes in roofs. The waterfront library was in shambles. The roof had collapsed, the books were drenched and the front door lay in the center of the building.
Local police moved through the cluttered streets trying to clear wreckage. Richard Doran, 62, beckoned a backhoe driver over to the front of his shop, where inside, three inches of mud covered the floor. A tidal surge had dumped a tangle of downed trees at his front door.
He still hadn’t seen any state emergency service workers and was hoping help would arrive soon.
“The longer it sits like this, the worse it is,” he said.
Power and water supplies remained cut and the main road into town was torn into chunks in places and piles of sand washed ashore by tidal surges blocked it elsewhere. Yachts and leisure cruisers were piled atop each other at the marina, and some washed up on the boardwalk.
Diane Robson and her husband Michael weathered the storm in their top floor apartment. On Friday, she stood on her balcony looking at her yacht lying in their next door neighbor’s yard, where it was flung by the storm electronic check payday advance.
“I don’t ever want to get back on the boat again,” she said “I’m too scared.”
Smith survived a cyclone in Cardwell in 2006 and felt at the time that help took too long to come. She said she wondered if this time would be any different.
“A lot of us feel like we’re on our own again,” she said.
Officials vowed to work hard to reach isolated towns and urged residents to be patient.
Prime Minister Julia Gillard said 4,000 troops would help with the cleanup operation, and that more than 600 police and emergency services workers were fanning out with chain saws and heavy machinery.
A ship carrying 3,000 tons (2,750 metric tons) of food and other aid was to arrive Friday in the regional city of Townsville, from where it would be trucked to smaller hard-hit towns.
The cyclone has added misery to a state battered for weeks by the nation’s worst flooding in decades, which killed 35 people, swamped dozens of towns and caused an estimated $5.6 billion dollars damage.
Gillard said the cyclone damage would be massive but that it was too early to quantify it.
Treasurer Wayne Swan said the cyclone, which hit a region that produces 90 percent of Australia’s banana crop and 30 percent of its sugar cane, would add about a quarter of a percentage point to inflation.
The central bank said in a report issued Friday that the earlier flooding could shave half a percentage point from Australia’s gross domestic product growth in the six months to the end of March, but that pre-flood growth levels would return in the June quarter as interrupted coal mining resumes.
After that, huge spending on rebuilding could help add quarter of a percentage point to GDP for two years after that. It said those forecasts did not account for the cyclone.
The Reserve Bank of Australia also said the floods would cause a surge in insurance claims but that the industry was well placed to cope with the increase.
Police said the man who died was 23-year-old who asphyxiated due to fumes from a diesel-powered generator he was using in a closed room as he sheltered from the storm.
Officials, who had given dire warnings of the storm’s strength, said lives were spared because people followed instructions to flee to evacuation centers or bunker themselves at home.
A large batch of earnings reports out Tuesday are likely to determine if indexes clear levels last seen more than two years ago.
The Dow Jones industrial average closed 20 points shy of 12,000 on Monday. The last time the Dow closed above 12,000 was June 19, 2008.
Four of the Dow’s 30 companies were scheduled to release results before the market opens Tuesday: DuPont, 3M Co., Verizon Communications Inc. and Johnson & Johnson.
Health care giant Johnson & Johnson said profit dropped 12 percent in the fourth quarter. The maker of Tylenol, medical devices and biologic drugs was hammered by recalls that pulled its products from shelves. Excluding one-time items, its earnings would have been $1.03 per share, matching analysts’ expectations.
DuPont said net income fell but the company still beat expectations. Profits surged at Verizon but fell a penny short of estimates.
Another Dow member, American Express Co., reported results after the market closed Monday. The credit card issuer said quarterly profits jumped 49 percent. But its adjusted earnings fell just short of expectations.
Later Tuesday morning, the Conference Board will release its Consumer Confidence Index for January. The index is expected to hit 54.6, after dropping to 52.5 in December. A reading of 90 signals a healthy economy, a level not seen since the recession began in December 2007.
The economy is also expected to be the focus of President Barack Obama’s State of the Union speech Tuesday night.
Stocks appear headed for a lower open. Dow Jones industrial average futures are down 31 points, or 0.3 percent, at 11,898. S&P 500 index futures are down 5, or 0.5 percent, at 1,282. Nasdaq 100 futures are down 11, or 0.5 percent, at 2,287.
Companies across the market rose on Monday. The S&P 500 index ended the day just 10 points below 1,300.
Technology stocks made big gains after Intel Corp. increased its dividend. Materials companies rose after a report from the National Association for Business Economics showed that economists are more positive about economic growth and the job market than at any time since the start of the Great Recession in December 2007.
Richard Fleming plans to leave his post as chief executive of the Regional Chamber and Growth Association by year’s end, the organization announced today.
Fleming has led the RCGA, the St. Louis area’s chamber of commerce, since 1994.
Fleming will remain in the post until his successor is selected, and will help in the selection, said Bob Reynolds, RCGA board chairman, and chairman of electrical supplier Graybar.
In a press release, Reynolds said that Fleming “wants a new challenge in his career. He has our full support.
A quarter of Indian microfinance companies may fail after a clampdown last month in their biggest market pared debt payments and curtailed bank financing, said N. Srinivasan, who consults on the industry for the World Bank.
As many as 60 to 70 of the nation’s 260 microfinance institutions are likely to collapse in coming months as banks halt lending to them to curb risks, Srinivasan said in an interview Nov. 19 in New Delhi. That would have a “devastating effect” on the poorest borrowers in remote regions, he said.
Lending and collections by micro-lenders have ground to a near halt in southern Andhra Pradesh state after the local government introduced new rules in mid-October aimed at protecting borrowers. A slump in microfinance loans may trigger a chain reaction of defaults by borrowers with multiple debts, Srinivasan said.
“Multiple loans help people manage money, like juggling balls,” he said, adding that every poor household in Andhra Pradesh has 9.6 microfinance-loan accounts on average. “What’s happening is that right in the middle of it, you remove a ball. Suddenly there is no ball to throw.”
Andhra Pradesh, the largest market for most micro-lenders, on Oct. 15 capped interest rates that companies can charge and ordered them to collect payments monthly rather than weekly. It also barred them from using coercive measures to force borrowers to repay debt.
Straining Capital
The move led to a slump in micro-lenders’ cash flows, strained capital levels and spooked banks, which account for most of their funding needs. Microfinance companies are seeking 10 billion rupees ($221 million) from banks for a liquidity fund, Vijay Mahajan, head of a lobbying group that represents about 44 micro-lenders, said Nov. 16 in New Delhi.
The new rules sent shares of SKS Microfinance Ltd., the largest such lender in the nation, plummeting 47 percent before Chairman Vikram Akula said on Nov. 19 that the firm had received bank funding and didn’t have a cash shortage. The comments helped shares of SKS, more than a quarter of whose loans are in Andhra Pradesh, rally 5.4 percent that day.
Rival Share Microfin Ltd., backed by New Zealand billionaire Christopher Chandler, plans to delay an initial public offering until customers restart payments and state and central governments deal with the current upheaval. Banks need to regain confidence in the companies’ operations, M. Udaia Kumar, its managing director, said in a Nov. 18 interview.
‘Trickle-Down Effect’
“Even if a single MFI defaults, it might have a trickle- down effect on the entire sector,” he said pay day loans. “Institutions with stronger net worth have a possibility of survival for a period of time.”
Share Microfin, based in Andhra Pradesh’s capital of Hyderabad, had planned to raise 10 billion rupees in early 2011.
Microfinance, which focuses on loans in poor areas largely shut out from traditional banking services, gained prominence globally when Muhammad Yunus won the Nobel Peace Prize in 2006 for his role in founding Bangladesh’s Grameen Bank. India, where banking services are available in about 5 percent of cities and towns, is the largest market for such credits.
India’s micro-lending has expanded at an average annual rate of 62 percent over the past five years in terms of number of customers, and 88 percent in terms of credit, according to Micro-Credit Ratings International Ltd., a Gurgaon, India-based ratings agency for the industry.
Moneylenders
A shortage of microfinance funding may force borrowers to turn to moneylenders, said Dipak Gupta, executive director of Mumbai-based Kotak Mahindra Bank Ltd. These unauthorized lenders operate outside the formal credit-delivery system and charge usurious interest rates.
“Money has stopped and a borrower is used to getting that money and circulating it,” he said. “If you don’t create an alternate system or don’t allow the system to rotate, he will go back to the moneylender.”
SKS, whose stakeholders include George Soros, has received 3.67 billion rupees from eight lenders including Axis Bank Ltd. in the past two weeks, Chief Financial Officer Dilli Raj said on Nov. 19 from Hyderabad, where the company is based.
Axis, India’s fourth-largest lender by market value, is awaiting a report by a committee set up by the central bank last month to review concerns about the microfinance industry, CFO Somnath Sengupta said.
The report, due in January, “will be the guiding principles for lending to the sector,” he said in an interview on Nov. 19. “We will continue to be prudent. There is no reason to panic.”
Axis’s loans outstanding to microfinance companies account for about 1 percent of the total, he said.
Still, the industry is bracing for consolidation, said Mahajan, who is also chairman of Hyderabad-based microfinance company Basix Group.
“We could see casualties among small microfinance institutions,” he said.
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