US asset management giant Blackstone is understood to be seeking the sale of a 13,800 m2 newly-renovated trophy asset in the heart of Milan, in one of the first major commercial real estate transaction mandates in the city since the Covid-19 outbreak.
According to well-informed market sources, Blackstone and its local partner Kryalos sgr have recruited Eastdil and Vitale Real Estate to sell the historic Post Building in Milan’s central Piazza Cordusio. The sale, known as Project Ermes, is said to be worth well over €220 mln.
Blackstone bought the asset vacant back in 2015 and has since completed an extensive €23 mln refurbishment programme of both the internal and external areas to restore the property’s historical magnificence, repositioning the asset to the highest quality standards. The complex, which houses Starbucks’s first Italian store and the first Starbucks Reserve Roastery in Europe, meets the latest environmental and energy consumption requirements with a LEED Gold certification.
Located at Via Cordusio 1-3 in the centre of Milan’s financial district on a 100% freehold site, the complex was originally built in 1901, and listed as a historical landmark in 1962. It initially housed the Milan stock exchange then the headquarters of Poste Italiane until 2011.
Current major tenants in the nearly-fully-let building include JP Morgan, Natwest and Kryalos, which all use it as their Italian headquarter location. Blackstone’s Italian partner and occupier in the building Kryalos Sgr oversaw the asset management and renovation of the asset.
With the sale, Blackstone is believed to be looking to take advantage of strong market dynamics with Italy remaining a core investment market for Blackstone Real Estate across different asset classes.
The sale comes as cap rates continue to tighten for prime transactions in Milan city center, with several recent deals closed at or below 3%. Recent examples include Covivio’s 2020 sale of Via Cernia 8/10 to BNP for €96 mln representing a 2.9% NOI cap rate as well as Credit Agricole’s 2020 sale of Via Armorari 4 to Allianz for €140 mln, or a 3.0% NOI cap rate.
Hines’ 2020 sales of Via Mazzini (€101 mln) and Via Orefici (€209 mln) to BNP REIM and Deka respectively were also sold for a 3% NOI cap rate.
Cap rates are under pressure across all of Europe’s core markets, with recent transactions in Germany closed at 2.7-2.8%. This includes Quest’s 2020 sale of Charlottenstrasse 82 in Berlin for €57 mln represented a 2.8% rental cap rate and OfficeFirst’s 2020 sale of Pontis Haus in Munich for €150 mln achieved a 2.7-2.8% cap rate.
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