Kennedy Wilson to enter Italy with €300m public office portfolio deal

US investor Kennedy Wilson is in negotiations to acquire a portfolio of Italian office buildings in a government-let deal, PropertyEU has learned.

The buildings are among the 21 assets offered for sale by Fondi Immobili Pubblici (FIP), a state-owned fund managed by Investire Immobiliare Sgr.

The deal, which is being negotiated off market, includes a dozen offices in northern Italy which were not included in the recent sales by FIP to Blackstone and Cerberus.

Blackstone bought five FIP office buildings in Milan (2), Genoa, Turin and Como for about €160 mln.

In a separate transaction, FIP has sold another sub-portfolio consisting of three army barracks in Bari, Rome and Bergamo as well as a number of other smaller assets across Italy to US private equity group Cerberus for around €250 mln.

Investire Immobiliare, part of Banca Finnat Euramerica, is also understood to have hired Jones Lang LaSalle to sell the remaining assets not included in these transactions on an asset-by-asset basis.

Privatisation drive
Launched in 2004, FIP was the first real estate fund to be created by the Italian government as part of a major privatisation effort and owns around 400 buildings across the country. The assets for sale are located mainly in northern Italy, in the regions of Lombardy, Piedmont, Liguria and Friuli-Venezia Giulia, as well as in the Lazio and Tuscany regions with some located in the south - Abruzzo and Apulia.

Investire Immobiliare hired CBRE in May last year to market 21 FIP assets, which consist of office buildings let entirely to the public administration. The total portfolio has a value of around €800 mln and covers a total 800,000 m2 of space.

The assets are home to public administration offices including public pension funds INAIL, INPS, the ministry of transport, the Internal Revenue Service, the Customs Agency, the police, the ministry of labour and the Territorial Agency.

All the properties are leased with a master lease agreement to the Agenzia del Demonio, the country's public real estate agency, with a contract running to December 2022. In total, the portfolio generates annual gross rents of over €63 mln.

Kennedy Wilson has been looking to enter the Italian property market for months. Last October it teamed up with asset manager Prelios to launch a bid for a portfolio of 90 Deutsche Bank branches but lost out to a joint venture of Hines and the Qatari sovereign wealth fund.