Chinese conglomerate Fosun has submitted its first real estate acquisition in continental Europe, the former Unicredit headquarters at Palazzo Broggi in Milan, as a candidate for PropertyEU's Deal of the Decade Awards.
Fosun closed the acquisition of the 47,000 m2 complex from Italian fund manager IdeaFimit in July 2015. The investment volume of €354 mln reflected a gross initial yield of 5.7%.
PropertyEU had broke news of the deal the previous April, reporting that that Fosun had agreed to buy the asset in the largest real estate transaction in Italy in years.
The transaction also marked Fosun entry into continental European real estate, shortly after Fosun Property Holdings established its European presence in Zurich under the leadership of Antoine Castro.
The deal is also believed to have been a first for a Chinese investor in the Italy real estate market. Palazzo Broggi was also the biggest transaction in Italy and one of the most visible transactions in Europe in 2015.
'As a new comer, Italy with its local peculiarities is probably not the easiest market to make the first transaction in (continental) Europe,' Fosun said in its motivation letter accompanying its Deal of the Decade submission. 'In fact local challenges and complexity of market conditions require a deal team with expertise and ability to be fast-paced. In addition, strong pressure from an ongoing tender process with internationally established and well-known investors made securing the transaction even more challenging. Despite these challenges we were successful against the competition in earning trust with the seller and in underwriting the transaction.'
Fosun emerged victorious over a partnership of Hines and Abu Dhabi Investment Authority (ADIA) for the historic building, which is located on Milan's central Piazza Cordusio. Hines and Adia offered €331 mln for Palazzo Broggi, while another joint venture, between Italy's Prelios and UK investor London & Regional Properties, tabled a €300 mln offer.
Palazzo Broggi was put up for sale through CBRE in July 2014 for a price of €400 mln. The landmark office building was owned by IdeaFimit’s Fondo Omicron Plus, which bought it in 2009 as part of a larger acquisition of €800 mln of assets from lender Unicredit.
Fosun plans to transform the property in one of the largest urban redevelopment projects in continental Europe and the new concept will feature retail, offices, luxury hotels and serviced apartments.
Fosun submitted Palazzo Broggi over the summer for consideration by the Deal of the Decade jury. The company entered European real estate in 2013 with the acquisition of Lloyds Camber in London.
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The submissions period for Deal of the Decade is now closed. PropertyEU has collected over 120 entries and our project team is drawing up a shortlist for the different categories ahead of a readers’ vote in the autumn. There will also be a formal jury vote. The Deal of the Decade Awards will be presented during a ceremony in Amsterdam in December.
