BVIC has entered into sale and leaseback arrangements for 9 properties, comprising a total of 32,627sqm of lettable area, and 34,739 including storage area. This is BVIC’s largest asset class, that contributed Eur14mm to BVIC’s rental income in 2004 and EUR 128mm to the Group’s sale revenue. 

A sale and leaseback agreement is a transaction where the Group sells, a property or part thereof, subject to a lease (normally on institutional terms) for a fixed period of time, usually 10 – 15 years to a Greek leasing company. BVIC will then enter into a typically coterminous occupational lease with a tenant, usually for a period as long as the lease agreement period. The rent received from the tenant is used to pay the interest and amortisation costs to the leasing company. At the end of the lease, BVIC has the right to re-purchase the property, usually at a nominal cost.  

The sale and leaseback agreements allow BVIC to transfer the asset’s ownership, while having the right to use or grant sublease of the property. BVIC retains a call option over the properties, so at the end of the lease term, the property may revert to the Group, usually for a nominal fee. 

In 2002, Greek tax law was amended so that sale and leaseback transactions were no longer subject to 11% transfer tax. As a result, BVIC had entered into a number of sale & leaseback agreements in respect of its larger, prime location buildings.

In summary, the benefits for BVIC of the sale and lease back structure are that:

The diagram below illustrates how the sale and leaseback process: