Qataris buy 40% of Milan landmark

Qatar Holding has agreed to buy a 40% stake in the flagship Porta Nuova mixed-use development in the city centre of Milan from Italian fund manager Hines Italia Sgr.

The deal, which follows six months of intense negotiations between the two parties, is said to amount to some €800 mln, valuing the project at a total of €2 bn.

Hines Italia, a joint venture between the Italian Catella family and Houston-based developer Hines, has sold a 40% interest in three development funds it manages, Varesine, Isola and Garibaldi. The stake corresponds to the three sections of its Porta Nuova project, located a few minutes away from Milan’s central station.

As part of the transaction, the three funds will carry 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.

This is the second investment in Italy by the Qatari sovereign wealth fund, 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 destination 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-story 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.

Porta Nuova currently has another 70,000 m2 of offices for lease, while the residences are half pre-sold, according to those who track the market.

CBRE acted as commercial advisor to Qatar Holding and Shearman & Sterling as legal advisor.

The deal gives the Italian property industry reason to cheer after months of virtual inactivity in the real estate investment sector. Italy saw less than €620 mln invested in the first quarter, down 55% versus the same period a year ago, according to figures from CBRE.

‘This operation marks a turning point for the past 24 months of the Italian real estate market, and may represent the beginning of a new wave of activity by foreign investors,’ said a source who wished to remain anonymous.