INTERVIEW: Prelios mulls European expansion, says business development head

Italian property services firm Prelios is looking to broaden its European presence through new partnerships, according to Andrea Boeri, new head of business development and CEO of Prelios Deutschland.

‘We would like to be able to support our clients in a large number of countries, covering France, Central Europe as well as the UK,’ Boeri told PropertyEU in an interview.

Milan-listed Prelios, which is currently active in Italy and Germany, is already working on a partnership with US private equity group Fortress Group for the integration of their real estate asset management and NPL platforms.

PropertyEU: With the new three-year plan Prelios aims to complete its repositioning as a pure third-party asset manager and service provider. How will this be achieved?

Boeri: Our current strategy rules out any direct investment like we used to do in the past. We have worked on the integration of the different service businesses of Prelios under a single name and platform, Integrated Services, and this will be used as our springboard for growth. Today the services and the asset management for third parties already represent nearly 60% of the total business in comparison to a very minor part before the crisis. This percentage continues to grow, we hope that it will reach up to 80% in the future.

PropertyEU: What about your activities in Germany?

Boeri: In Germany, we have completely exited the housing sector with the sale of the DGAG portfolio and the residential platform. The latter previously employed 300 of the 800 staff of the group. In future, we will focus exclusively on the commercial property sector and in particular on the provision of transactional services as well as asset management services, where we have carved a niche for ourselves in the management of shopping centres. Germany has a big institutional market and the market is very mature and specialised, you do not need to do everything in-house.
We will also continue to sell the Karstadt assets acquired in the past together with other members of the Highstreet consortium. The company has divested over €1 bn of these properties in 2013 alone, largely thanks to strong demand for German real estate on the part of both local and foreign investors.

PropertyEU: Italy, Prelios’ home market, is also witnessing somewhat of a revival. In what way could this benefit Prelios?

Boeri: One of the major transactions completed in the market was the sale of the Olinda Fondo Shops portfolio that we managed. [Prelios has signed a binding agreement to sell the remaining portfolio of Olinda Fondo Shops to AXA Real Estate and US private equity group Apollo Global Management for €303 mln, ed.] However, a majority of the investors active in Italy at the moment have an opportunistic profile and we are not willing to divest assets at a yield of 10-13%. We prefer to work on prime assets, as we did with the historic Galleria Manzoni in Milano, or with the launch of the Parchi Agroalimentari Italiani fund, aimed to develop the new Eataly department store in Bologna.

PropertyEU: The new 2016-2018 business plan envisages the disposal of all co-investments by end-2018. How is the divestment strategy proceeding?
Boeri: If we wanted to, we could accelerate the process but there is no rush. We do not want to sell at a huge discount.

PropertyEU: What are Prelios’ priorities for the next 18 months?
Boeri: We would like to give support to our clients through the provision of services in a larger number of countries. We would like to be present in France, the UK, as well as Central Europe beyond Poland. We would like to achieve this also through the creation of business partnerships.

PropertyEU: On the partnership front, how are the discussions with Fortress shaping up?
Boeri: The deadline has been extended to allow talks to go forward. We shall see.

PropertyEU: The company aims to halve its debt load by 2016. How will this be achieved?
Boeri: This will be done through the planned sale of our co-investments. Furthermore, the services business is currently at a profit and the Italian business no longer requires large cash injections. The real issue in Italy though is for how long the write-downs – which have put a heavy drain on the company’s profits in the past - will continue.