On August 12, Italy’s Coima Res will be delisted from the stock exchange, marking the end of a six-year spell on Euronext Milan for the office-focused REIT.
The successful take-private deal by Evergreen, a joint-stock company with share capital held by Qatar Holding (97%) and Coima Holding (3%) marks the beginning of a new phase for the firm which CEO Manfredi Catella says offers ‘a solid base for growth’ over the next cycle.
The firms announced the take-private plan in April, a strategy largely underpinned by the fact that Qatar Holding was already the largest shareholder in Coima Res, with a holding in the region of 40%.
In fact, during the offer period, that ran from 27 June to 22 July, shares equal to around 98.2% of the firm were tendered, superseding the planned threshold of 95%. Coima Res, following the successful bid, is now being transformed into an externally managed, fixed-capital real estate investment company, or SICAF, equivalent to a private REIT under Italian law.
Market asymmetry
‘There’s a significant asymmetry between the public and private markets at the moment,’ Catella notes. ‘The listed market offers capital at a price which is rather high. With the delisting, our plan is to carry on with exactly the same platform, keeping the same name and the same team, and continue with our proven strategy. Only, let’s remove the discount to NAV imposed by being listed, and let’s put ourselves in a position where we can grow further.’
Catella adds that he was ‘pleased’ his firm delivered value to shareholders during the listed phase thanks to some ‘disciplined management’, keeping a promise to grow through a successful recycling of equity ‘without ever proposing capital increases’.
However, in an environment of discounts to net asset value, this was also a way to ensure that holdings were not diluted. Shareholders have now received €10 per stock under the delisting offer, in line with the IPO price but representing a profit when dividends are taken into account.
Going forward, it is envisaged that Coima will be able to access greater pools of capital, while the firm’s founders are expected to substantially increase their investment in the firm.
The offices of the future
Another couple of kinks in the road post the 2016 listing also convinced Catella and co that there was life beyond the public markets. ‘We carried out some studies during the pandemic on the future of the office markets. We found that while office demand will likely be resilient for core, prime product, we see an overall reduction in demand, of around 10-15% net of the increase in amenities.
'We also realised that there will be strong market disruption, driven by an acceleration in the concentration of demand for highly-connected neighbourhoods, with good public transport, a high degree of services and overall quality.
‘These findings were already embedded in Coima Res’ investment strategy and have subsequently reinforced it. We also see an increasing need to repurpose offices that are scattered around cities, and focus on the flight to high-impact premises with what we call “bullet-proof” fundamentals.’
Coima’s portfolio today is 60% structured around trophy Milan commercial district, Porta Nuova, and has been recently boosted with high profile leasing deals – a 40,000 m2 deal to house 3,000 KPMG employees and another 20,000 m2 signing with a similarly blue-chip tenant in the works. For Catella, they are proof of Coima’s forecasts about the ‘office of the future’.
Going forward, the firm’s strategy will be about investing in the same non-replicable assets – also geographically close to Porta Nuova and in other select Italian locations – which are highly environmentally sustainable. Sustainability is an inescapable trend, he says, and Coima plans for its portfolio to be net carbon zero by 2030.
While Catella believes that the right fundamentals should remain a guiding principle, he believes that the present macro-economic and geo-political headwinds will ultimately generate repricing and a better market entry timing.
‘Towards the end of last year, the markets were highly priced. We see an opportunity for repricing going forward and potentially having less competition. We will be ready to invest, although we’re not in a rush. Our leverage has always been low, at around 30%. We don’t expect to go significantly higher but we will take a dynamic approach.’
Post-REIT lessons
Although Catella is optimistic about the post-public prospects, he reminisces fondly about Coima’s adventures on the stock exchange and the steep learning curve it represented. ‘When we went public, I thought we were pretty disciplined in terms of reporting et cetera. But listing creates a whole set of requirements from taxonomy to reporting which really teach you important skills.
‘We also created a think tank with other listed parties across Europe – who weren’t rivals – so we could frankly exchange views and share experiences.’ That dialogue with the likes of Meka Brunel at Gecina and Pere Viñolas at SFL was ‘priceless’ according to Catella, and he intends to now build on these experiences and construct further partnerships to grow – albeit on the private track.
