Italy's GCI links up with BNP Paribas on EUR 700m fund

The Italian arm of BNP Paribas REIM has signed an agreement with Auchan's Gallerie Commerciali Italia to launch a EUR 700 mln closed-end investment vehicle, Prime Shopping Value.

Under the agreement, GCI will transfer a 15-asset portfolio to the vehicle, whose units will be placed among institutional investors. The package includes 13 commercial galleries and two retail parks distributed across the country.

French hypermarket group Auchan plans to retain a stake in the fund, which is expected to generate returns of over 8%.

'This operation is an indication of our interest for the commercial real estate sector which with EUR 1.5 bn of assets already represents around 33% of our assets under management,' said Cesare Ferrero, country manager Italy for BNP Paribas Real Estate, and Ivano Ilardo, CEO of BNP Paribas REIM SGR.

Edoardo Favro, chief executive of GCI added: 'These are very hard times for Italy and for our sector, and we are aware of what it takes to launch such a project at this particular time. However, we are also convinced that investors will be able to appreciate the quality of the portfolio.' The move will allow GCI and Auchan to finance the large development programme planned in Italy, he added.

GCI owns a total of 46 retail centres in Italy, largely anchored by Auchan hypermarkets. Auchan took full control of Gallerie Commerciali Italia in January this year, after acquiring the remaining 49% stake from US retail REIT Simon Property Group.