Foundations set up by the
National Bank of Hungary plan to shift a large part of their
funds from local government debt into commercial real estate
assets, the head of the firm managing the assets has been quoted
The six educational foundations, established in 2014, have
received nearly 1 billion euros ($1.13 billion) of central bank
funding, investing most of the money in Hungarian government
On Wednesday, European Central Bank President Mario Draghi
said the ECB would continue to monitor the activities of the
foundations to ensure they were not involved in state financing.
Zoltan Fekete, chief executive of Pallas Athene Domus
Optima, told the weekly Figyelo that the foundations could
funnel as much as half of nearly 200 billion forints ($718
million) now invested in government debt into real estate.
“While we do not share (the ECB’s) concerns – the government
bond portfolio we manage represents less than 1 percent of the
entire public debt – in response to their signals, among other
things, we have started to regroup our assets,” Fekete was
quoted as saying in an interview published on Thursday.
He added that a plunge in money market returns after cuts in
the central bank’s base rate to a record-low 0.9 percent
was also limiting returns, while the real estate market offered
yields of 6-7 percent.
“It is clear that only foreign players have a chance in
deals worth more than 20 million euros,” Fekete said. “If we are
successful, we will take a share of the expected 10-15 percent
growth in the real estate market in the next three to four
Fekete said the foundations would purchase office blocks and
other commercial or industrial real estate, and had already
identified a number of potential investment targets in Budapest
($1 = 278.58 forints)
($1 = 0.8861 euros)
(Reporting by Gergely Szakacs; Editing by Kevin Liffey)