Invesco Real Estate confirmed on Wednesday that it is spending between €150 and €160 mln on the acquisition of a build-to-rent (BTR) project, part of the major SeiMilano development site encompassing 300,000 m2 to the south-west of Milan.
The news was first reported by PropertyEU last week. Under the deal, Invesco is buying the second residential lot of SeiMilan which consists of 53,000 m2 of multifamily rental apartments from owners US private equity firm Värde Partners and local developer Borio Mangiarotti. The deal is believed to be the first BTR investment made by Invesco Real Estate in Italy. It was made on behalf of the investor's new European living fund in a Joint venture with Nordrheinische Ärzteversorgung.
William Ertz, senior director - fund management at Invesco Real Estate, said: ‘Demand for residential apartments in Milan is increasing. While the market is still developing, there are currently almost no institutional quality assets offering modern, well-designed and quality-built apartments. This acquisition in SeiMilano sets an excellent precedent for our Pan-European Living strategy and, looking ahead, we will build on this with similarly attractive assets.’
‘The fundamentals shaping the Build-to-Rent market in Europe continue to be highly attractive and we expect strong interest in the sector from institutional investors over 2021 and beyond. This acquisition demonstrates Invesco’s strong market access in the residential sector,’ concluded Ertz.
Invesco launched the European Living Fund in November last year, targeting a 4% p.a. gross income return and 5.5% to 7.5% gross total return. Since its launch the open-ended Fund has raised an equity of over €260 mln which with debt provides €400 mln of investment capacity.
Located near Milan’s Risceglie metro station, SeiMilano is one of the city’s largest regeneration projects encompassing 100,000 m2 of housing, 30,000 m2 of offices and 10,000 m2 of ancillary retail facilities within a new urban park of over 16 hectares, the second largest in the Milan area.
The section bought by Invesco entails the development of a total of 650 apartments over 11 buildings. Phase I of the project encompassing offices and the first residential lot, which is sold out, is expected to be completed by the end of 2022, while the second phase encompassing the residential section bought by Invesco is due for completion by 2024.
The deal follows the closing of the sale in July last year of the office part of SeiMilano to private equity firm Orion Capital Managers. Orion made the purchase on behalf of its European Fund V through the newly-launched Park West investment vehicle managed by DeA Capital Real Estate.
Under the transaction, which was first agreed in early 2019, Orion committed to invest a total of around €100 mln to buy the site and develop an office complex consisting of three buildings providing a total lettable area of 27,600 m2.
Värde Partners has a 90% share in the joint company while Borio Mangiarotti, the original owner of the site, has a 10% share.
Edoardo De Albertis, CEO of Borio Mangiarotti, said: ‘We are proud that another important international investor has decided to invest in SeiMilano, sharing with us the goal of giving the city a new place to live, conceived according to principles of sustainability. welfare and social inclusion.’
Mirko Tironi, head of asset management for Italy at Värde Partners, added: ‘We were among the first to believe in a project that focused on alternative living and placed ESG values at the center. This approach, demonstrating the quality of SeiMilano, has allowed the arrival of a new major international investor, whom we welcome with great satisfaction. We believe that this entrance will be of great support in the development of a neighborhood that aims to create a space of well-being and sharing for both buyers and all citizens who will live in the area.’
Carlo Romanò, senior director of transactions Italy for Invesco Real Estate, said: ‘SeiMilano is an important development for the Italian real estate market, a redevelopment project which, due to its large size, is able to make up for the scarcity of Build- to-Rent available today in Milan. We are thrilled to invest in this development opportunity to bring modern, next-generation, professionally managed Build-to-Rent residences to a market with a strong demographic development.’
The vendors were advised by Vitale&Co. Invesco Real Estate was advised by CBRE. Kryalos will act as development manager for the project.
