INTERVIEW: Manfredi Catella of Hines on major Milan sale

Manfredi Catella, head of Hines’ Italian arm, talks to PropertyEU about the sale of a 40% stake in the Porta Nuova development in Milan to Qatar Holding.

The deal, which was announced last week, is said to value the project at a total of €2 bn.

Hines Italia, the investment management platform controlled by Houston-based developer Hines and Manfredi Catella, has placed a 40% interest in three development funds it manages: Varesine, Isola and Garibaldi. The stake corresponds to the three sections of the Porta Nuova project, located near Milan’s central station.

As part of the transaction, the three funds have carried out a capital increase with Qatar Holding subscribing to the newly issued shares. The remaining 60% will be retained by the current sponsors of the project. Qatar Holding is a unit of Qatar’s sovereign wealth fund.

The operation is being financed by lenders Intesa Sanpaolo, Unicredit, Hypothekenbank Frankfurt, Banca Popolare di Milano and Monte dei Paschi di Siena.

The Porta Nuova deal is the Qatari sovereign wealth fund's second investment in Italy and follows the acquisition last year of luxury hotel group Smeralda Holding, the owner of a portfolio of four hotels in the Costa Smeralda tourist resort on the Italian island of Sardinia.

Porta Nuova is a mixed-use development in downtown Milan combining offices, retail and residential. It provides a total of 254,000 m2 of space, most of which is already delivered, with the exception of some residential units in the Isola and Varesine sections of the project. The site is home to the 30-storey Garibaldi Tower, officially the tallest building in Italy, designed by Cesar Pelli. The skyscraper provides over 60,000 m2 and is 100% leased to Unicredit Bank.

PropertyEU: How did you come into contact with the Qatari investor?
Catella: We got know each other in the summer of last year and we have since had direct contact regarding the sale of Porta Nuova. Negotiations became serious in November last year and closed in about six months, a relatively short time period. We did not face any major issues during the negotiation process because the Qataris had a very professional investment team.

PropertyEU: What does this sale mean for the development of Porta Nuova?
Catella: This transaction demonstrates that this is a core development and not an opportunistic one. The investors which have contributed equity to the project in the development phase will exit this investment following completion and this deal helps them extract value from the operation. It is also strategic because it allows us to lower the leverage of the asset and introduce a stronger financial structure.

PropertyEU: How does this sale reflect Hines’ strategy in Italy?
Catella: Our first goal was to demonstrate the high value and quality of this project and clearly the entry of such a qualified and prestigious investor is an indication of this. Even though Qatar Holding is taking a minority stake in the site, it will bring a solid partnership and expertise given the highly diversified investment portfolio that it manages.

This transaction is also important for the Italian real estate sector in general, because it puts the market under the spotlight on the international scene. Institutional investors look at the Qatari sovereign wealth fund as a reference point and their investment might trigger new activity - which is important at a difficult time like this.

PropertyEU: How do you see the future for Hines Italia?
Catella: Hines continues to consider Italy as a strategic core market for the business. We have been active in this market since 1973 with our family company Coima and Hines for over 50 years. We feel that we are ready to grab opportunities to consolidate the group, also through partnerships and acquisitions. The time is right to take a step forward, without rushing.