FdR's Italian arm launches spec project in Milan

Foncière des Régions’ Italian arm Beni Stabili has started construction work on an office development in Milan on a purely speculative basis, PropertyEU has learned.

The entire project, dubbed Symbiosis, will encompass a total of 120,000 m2 over 10 buildings, involving capital expenditures of €270 mln. Located near the Prada museum close to the city centre, the project is expected to generate a yield on cost above 7% on delivery in 2017.

Rents in the area at currently stand at €300 per m2, representing a discount of roughly 50% to offices in the central Duomo area.

Beni Stabili owns over €4 bn of assets in Italy, with a large proportion represented by the so-called ImSer portfolio consisting of assets let to Telecom Italia. The Italian REIT refinanced the €1.7 bn portfolio last year with €500 mln of new credit facilities from a pool of Italian and international banks as well as €150 mln of new equity. It is understood to be considering a sale of some of the assets this year.

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In France, Foncière des Régions is planning €1 bn of investments this year and €700 mln of disposals, according to FdR’s head of corporate development Philippe Le Trung. ‘It will be the first time since the 2008 financial crisis that we invest more than we divest,’ he noted. The €1 bn earmarked for investment will involve €700 mln of acquisitions, to be financed largely through existing equity resources, and €300 mln of investment in developments.

The sales will involve some logistics assets as well as part of FdR’s French residential assets and smaller office units, he added. The bulk of FdR’s logistics assets was sold in 2014 to Blackstone.

The company is targeting a diversified portfolio largely focused on offices (60%) and two other businesses, German residential (20%) and hotels (20%).

FdR recently announced plans to take control of its hospitality arm Foncière des Murs (FdM) to help raise the allocation to the high-yielding sector, which currently represents only 8% of its total portfolio. FdM is also the 60% owner of FdM Management, the European operating side of the business, which is currently in the process of raising capital from a number of institutional investors.

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