Pavilion, Porta Nuova, Milan


Pavilion at Porta Nuova in Milan

The attempt to take Italian real estate investment trust (REIT) Coima RES private is not a vote against public markets, according to founder and CEO Manfredi Catella.

Earlier this year, Qatar’s sovereign wealth fund and Catella made an offer to acquire all shares in the listed company that was launched six years ago. Catella says the privatisation is necessary to fully support the growth plans of the company, which has played a significant role in the regeneration of Milan’s large Porta Nuova regeneration project.

In 2016, Coima RES was the poster child of Italy’s new REIT regime, Società di Investimento Immobiliare Quotata (SIIQ). It was the first newly created SIIQ to emerge alongside existing companies that converted to SIIQ status, and it had the backing of Qatar Investment Authority, which today through Qatar Holding, still owns around a 40% stake.

As is the case for many listed real estate companies, Coima RES is trading at a discount to net asset value. Current pricing in REIT markets has encouraged the private takeover of companies in recent months, such as Blackstone’s recent offer to acquire NYSE-listed PS Business Parks. Given this backdrop and low expectations for pricing to improve in the near future, Qatar and Catella see more of a chance of realising their original ambitions for Coima RES by taking it down the private route.

“In 2016, we decided to move forward and raise a permanent capital vehicle [that] ultimately could become dominant” within Italy’s commercial real estate market, says Catella, who founded the wider Coima group – including developer Coima REM and institutional fund manager Coima SGR.

“At that point in time, we decided to move for the listed format. And therefore, we went through the IPO process, which was successfully completed and thereafter we have basically executed phase one of the plan.”

Phase one was investing the capital raised “consistently with the strategy announced to the market”, actively managing the assets and crystallising some performance through sales. Coima RES has already sold €325m of assets since inception, generating a net return of 10% to investors, Catella says.

But the founders have decided that phase two – a period of accelerated growth now that a track record had been established – will be all but impossible to achieve as a listed REIT. “If you want the evidence of this is in front of all of us,” says Catella

Manfredi Catella at the IPE Real Estate Global Conference & Awards 2018

Manfredi Catella, CEO and founder of Coima, speaking at the IPE Real Estate Conference & Awards 2018 in Milan

He cites figures highlighting the mismatch between public and private real estate markets. “In between December 2019 and April 2022, the market cap of European REITs had lost 20%, which is equivalent to €28bn. On a parallel basis, if you look at the private equity market… in Europe in the same period, €52bn has been raised.”

A similar comparison can be made within the Coima group. Coima SGR, the institutional private fund management subsidiary, has raised €3bn to invest in Italian real estate since Coima RES was listed. 

If Catella and Qatar succeed with their offer, Coima RES will remain an open-ended, perpetual-life vehicle. “The only difference between the current version and the new version – if obviously, the offer will be completed – is that instead of listed it’s private,” Catella says.

The alternative is to remain listed and wait for a positive repricing in the public markets. “We never thought about adding a permanent capital REIT without phase two, meaning the growth,” says Catella. “To remain listed is certainly an option, by definition. You have to then ask yourself whether you think there will be a dynamic in the listed market in front of us that will support a rerating of the price.”

Catella and Qatar certainly do not, especially with a proliferation of external factors that have the potential to weigh on public markets in the foreseeable future. Obvious examples include the war in Ukraine, inflation, Italy’s economic outlook and the recent working-from-home disruption to the office sector. “We’ve taken a view that, given circumstances at the macro level, given the specific situation of Italy, given the contingent situation on commercial properties, we don’t expect the listed market to reward adequately such a strategy in the listed format.”

They also do not want to play such a waiting game. Catella has ambition for Coima RES to become a “national champion” and in the coming years to grow to a scale comparable with some of the big European real estate players in France, Germany and Spain.

“It’s actually very important, because when you have national company of this kind, this company can invest in research and innovation,” he says. “They can become more innovative, because they have the scale to innovate with a larger impact,” Catella says.

“These companies become [like] schools, meaning they can hire young people and let young people grow into great professionals… and they can contribute to make the local market more liquid.”