20.10.2016

Tax Changes and its Implications on the REIC Market in Greece

NBG Pangaea overview

• Owns a real estate portfolio of 322 commercial properties (mainly retail

and offices) with a market value of c. €1.5 bn

• Active in Greece, also present in Italy & Romania

• From Jan-2013 to Aug-2016 the Group invested c. €594mn in real estate

(out of which c. €426mn in Greece).

• Creditworthy tenant base comprising among others National Bank of

Greece, Cosmote, Folli Follie, Vodafone, Public, Italian Republic, Adecco,

Telecom Italia, UBI, BNP Paribas Cardif.

2

Grivalia Properties overview

• c.€60m committed equity & additional €100m soft commitments

• Plans to inaugurate a high-end hotel and resort portfolio of tourism

properties in Greece & abroad

• Project guided by value investment philosophy

• AUM c.€950m - invests mainly in prime commercial real estate

• Active in Greece, also present in Serbia & Romania

• Tenant base comprises blue chip multinationals & local champions

e.g. BofA, Blackrock, Marks & Spencer, L’Oreal, H&M, Procter&Gamble

GrivaliaHospitality

3

Grivalia attracted top-tier international investors

• Prominent NA institutional investors - Fairfax, Fidelity, Wellington, Capital (and significant others)

invested in Grivalia & Greece more than €320m

Eurobank Ergasias20,5%

Fairfax41,5%

Fidelity5,8%

Wellington11,2%

Eurobank Ergasias55,6%

Lamda 14,8%

REIB5,8%

Eurobank Ergasias55,6%

Fairfax19,1%

REIB5,8%

•Shareholders

allocation after

the 2006 IPO

•Acquisition of

Lamda stake by

Fairfax in 08/2012

•Acquisition of REIB stake by Fidelity

in 03/2013

•Fairfax share increased in 02/2014

€193m SCI

•Wellington & Capital acquire stake

from Eurobank in 06/2014

Milestones

4

NBG32,66%

Invel65,49%

Free float1,85%

NBG Pangaea attracted top-tier international investors

• NBG Pangaea was established in 2010 as the real estate vehicle of the National Bank of Greece

(“NBG”).

• Invel Real Estate Netherlands II BV (“Invel”), with York Capital Management (“York Capital”), a

global investment management firm as a Co-Investor (LP), acquired a 66% stake in Dec-2013, by

investing more than 650 mn.

• The current shareholding structure of NBG Pangaea, following the reverse merger with its

subsidiary MIG Real Estate REIC, is:

5

Why international investors decided to invest

Strong Business Plan

Top tier management

Prime, diversified market-priced

portfolio

Corporate Governance

Long-term outlook

Stable & tax transparent REIC platform

6

Impact of changes in REIC taxation

Tax on AUM Increase in taxation of AUM from 0,105% to 0,75% - more than 600%

ENFIA Increase of supplementary real estate tax by more than 100%

Result • Loss of competiveness over ordinary companies

• Huge discrepancy with other European REITs

7

REIC vs. S.A. (1/2)

Example 1Low – levered

scenario

Almost same amount of taxes as a common S.A.

REIC S.A.

Revenues 61.953 61.953

Expenses -10.694 -10.694

Unified Property Tax (ENFIA) -5.268 -5.268

Depreciation -186 -18.223

Interest expenses -1.658 -1.658

Profit before tax 44.146 26.109

Taxes* -7.439 -7.114

Profit after tax 36.707 18.995

Total taxes -12.707 -12.382

* Including AUM tax for REICS – 29% for S.A.

Non-cash item

• Investments of c. 1bn

• Occupancy at c. 95%

• Leverage of c. 60mn

• Cash of c. 70mn

8

REIC vs. S.A. (2/2)

Example 2Increased debt

scenario

With additional debt of €200m, the S.A. pays c. 34% fewer taxes

REIC S.A.

Revenues 61.953 61.953

Expenses -10.694 -10.694

ENFIA -5.268 -5.268

Depreciation -186 -18.223

Interest expenses -11.658 -11.658

Profit before tax 34.146 16.109

Taxes* -7.439 -4.214

Profit after tax 31.976 11.895

Total taxes -12.707 -9.482

* Including AUM tax for REICS – 29% for S.A.9

What is happening internationally

10

Many EU countries have established REIC regimes and are competing in attracting these foreign

investment inflows (e.g. Spain, Belgium, Netherlands, France, Germany, UK).

A common feature of REICs internationally is their tax transparency. The tax features of the REIC

regimes internationally are fairly homogenous, i.e. in most of the cases, REICs’ rental income is

exempt and, in most cases, capital gains are also exempt.

Small variations exist, for example, in Spain, one of our main competitors, REICs are exempt from

income and capital gains tax, with the exception of income and capital gains derived from

investments sold before a 3-year holding period.

Belgium is the only country, apart from Greece, in which SICAFI’s are taxed on assets. A tax rate of

0.0925% for public SICAFIs is imposed on their NAV (0.01% for institutional SICAFIs, i.e. controlled

either exclusively or jointly by a Belgian public SICAFI. The other shareholders need to be either

institutional or professional investors).

Adopting the European REIC taxation regime would improve the picture

• Greece is the only country where we have taxes on corporate level and not

shareholders level

• As a result, investors in Greek REITs are burdened by double taxation

• We have to adopt best practices from international experience

REICs taxation

Illustrative example

100

100

-15%Vehicle taxation

Investor taxation

Profit bf tax Vehicle tax

85

PaT Investor tax DividendInternational

income tax

0% 85 -10%

0% 100 -15% 85 0%

Net Income

85

76,5

11

Alternative Proposal

To revert to the fixed tax rate of 0.3% on the fair value of the cash generating investment properties

(a tax rate which was in force from 1999 up to 2006, prior to the amendment of L.2778 by the L.

3522/2006).

Note that the proposed tax rate of 0.3% is still well below the tax rate applied in the Belgium public

SICAFIs, where a 0.0925% is applied on the SICAFIs’ NAV.

12

Thank you!

13