Beni Stabili has outbid the main foreign investors active in the Italian market to win the auction for a €125 mln portfolio of public buildings in Milan.
Beni Stabili has outbid the main foreign investors active in the Italian market to win the auction for a €125 mln portfolio of public buildings in Milan.
The Italian REIT and its two partners trumped the competition by offering more than the minimum price of €125.3 mln set by the vendor.
Beni Stabili's partners in the transaction are US investment manager Varde Partners and Milanese development company Borio Mangiarotti. The trio's success in the auction is notable as foreign investors, largely private equity investors from the US, have dominated investment activity in the Italian real estate sector in recent years.
Two of the six properties will be used mainly as offices and will be retained by Beni Stabili. The properties are Corso Italia 19, which is occupied by local healthcare agency ASL, and Via Principe Amedeo 5. Together they comprise a total 22,450 m2 of GLA.
Following refurbishments costing €20 mln, the office buildings which are located in the central business district of Milan will be added to Beni Stabili's €4 bn core portfolio.
Beni Stabili said that once refurbished to Grade A standard and rented at market values, the two assets are expected to have a gross yield in line with the rest of Beni Stabili's portfolio (5.9%). The average net initial yield for prime offices in Milan is 4.75%, according to CBRE's EMEA rents and yields market view for Q2 2015.
The other four assets will be redeveloped for residential use and be bought directly by Beni Stabili's partners.
The auction was part of the first structured disposal process established by Cassa Depositi e Prestiti (CDP). CDP is a government-controlled company that manages two public saving schemes, Postal Savings Bonds and Passbook Savings Accounts, offered by the Italian postal service. The funds raised are invested in Italian public entities and infrastructure.