The Qatar Investment Authority has taken full control of the €2 bn Porta Nuova mixed-use development site in central Milan in what is the latest in a string of major European real estate acquisitions.
The Qatar Investment Authority has taken full control of the €2 bn Porta Nuova mixed-use development site in central Milan in what is the latest in a string of major European real estate acquisitions.
The sovereign wealth fund, which already owned a large stake in the site, has now acquired an additional 60% interest in a deal valuing the project at over €2 bn.
Porta Nuova is a mixed-use development in downtown Milan combining offices, retail and residential. It provides a total of 290,000 m2 of space across three sections, Varesine, Isola and Garibaldi, located near Milan's central station. The office element is 80% let at present.
The Garibaldi section is home to the 30-storey Garibaldi Tower, officially the tallest building in Italy, and which was designed by Cesar Pelli. The skyscraper is 100% leased to Unicredit Bank.
QIA, through its Qatar Holding arm, is buying the interest from a consortium made up of asset manager Hines Italia sgr's European Development Fund, Italia Core Opportunity Fund and MontePaschi Hines Real Estate Crescita funds, as well as Italian insurance company Unipol Sai and property companies Coima and Galotti.
Hines Italia Sgr will continue to manage the Qatari-owned investment funds which control Porta Nuova. Coima, the property company of the Catella family, will be responsible for property and project management.
POSITIVE SIGN
'The acquisition by QIA represents a very positive sign for Italy in terms of attractiveness of the country to leading institutional investors. For Porta Nuova and its original sponsors, it is an extraordinary result proving the quality of concept and execution of one of the largest mixed-use development in Europe,' commented Hines Italia Sgr's CEO Manfredi Catella.
QIA took an initial 40% stake in Porta Nuova in May 2013. It was the SWF's first major real estate operation in Italy and since then the Middle Eastern investor has significantly expanded its holdings in the country.
In October last year it teamed up with Hines to take over a portfolio of 90 Deutsche Bank branches for a price of €134 mln. Hines and the Middle Eastern sovereign wealth fund emerged ahead of a joint venture of Kennedy Wilson and Prelios as local asset manager as well as a partnership of Colony Capital and asset manager IdeaFimit in the bid to acquire the assets, which are being leased back by the German lender under a 12-year rental agreement.
They also launched a €300 mln fund, known as Italian Banking Fund (IBF), to invest in Italian banking assets. The vehicle, which is managed by Hines Italia Sgr and has QIA as its only unitholder, is believed to have acquired Deutsche Bank's Italian HQ at Milan’s Bicocca area, which currently generates an annual rental income of €8 mln.
Also last year, QIA and Hines Italia bought the Credit Suisse headquarters in Milan from US developer-investor Tishman Speyer for over €110 mln in cash.
BUSINESS DISTRICT
News of the Milan acquisition comes as the Qataris brace themselves for another major European investment; the acquisition of the 730,000 m2 Canary Wharf office estate.
QIA and North American investor Brookfield Property Partners have obtained backing for their €3.5 bn bid for Songbird Estates, the majority owner of Canary Wharf Group, from investors holding more than 94% of the outstanding shares.
QIA’s acquisitions of Canary Wharf Group and Porta Nuova highlight the Qataris’ desire to create value by tapping into cities' development potential. At a total of over 11 million sq ft, Canary Wharf Group has one of the largest development portfolios of any London developer – and offers one of the biggest value-creation opportunities.
In 2015 the group is expected to embark on the largest development pipeline it has undertaken since the 1990s with four separate projects totalling 22 buildings and 5.1 million sq ft of space.
Similarly, Porta Nuova is one of the largest city-centre regeneration projects in Europe.