REAL ESTATE - The Belgian government has chosen property firm Cofinimmo as partner in a €1.2bn Sicafi, to be listed last year.
The REIT-like structure will comprise 79 buildings used by federal ministries and European organisations. The government will also contribute 10% of the capital.
Sicafi, or “Société d'investissement a capital fixe en immobilier”, is a form of fixed capital real estate investment trust.
Cofinimmo will contribute 12 properties worth €512m from its own portfolio. In the third stage, ‘Sicafi 2006’ – the partners have yet to choose a name – will pay the state €647m for a property portfolio that includes the ministries of finance and foreign affairs, and three European Commission-occupied buildings.
The firm will also take over a €74m lease obligation on one of the properties and contribute €52m to refurbish formerly state-owned properties. Some state buildings will be vacated and redeveloped.
The average lease length of the buildings is 14.7 years, though they range from two to 21 years. The average yield will be 6.7%.
Cofinimmo will hold 57%-60% of the Sicafi and the state will hold 10%. After next year’s planned flotation, the partners predict that domestic retail investors and institutions will hold the other 30%-33%.
Yet details of key elements of Sicafi 2006 were sparse.
“We haven’t yet chosen the strategy,” said Cofinimmo chief financial officer Jean-Edouard Carbonnelle. “We’ll hope to attract retail investors in Belgium and institutional investors in Belgium and abroad, but the percentages haven’t yet been decided.”
Given a domestic industry of €14bn, the institutional investors are likely to be non-Belgian pension funds.
Nor has the Sicafi yet chosen a managing director. “It will be a common decision,” said Carbonnelle.
“The person will have to be not just an expert in real estate but with a knowledge of letting properties to this kind of occupier. They will be able to carry the image of the company for the IPO and later for investors.”
He said the new Sicafi was unlikely to be a one-off deal.
“We’ve already been involved in sale and leasebacks by the government. We’re looking to the public sector to improve the quality of our portfolio and profitably expand our group. It could open up – hopefully – other agreements of this kind.”