Struggling Italian developer Risanamento said on Wednesday that it has signed a binding agreement with Australian group Lendlease to relaunch the development of its flagship Santa Giulia site in Milan.
Under the terms of the development agreement Risanamento, which is largely owned by creditor banks Intesa and Unicredit, will develop the northern lot, involving a total of 400,000 m2 of residential and commercial space, jointly with Lendlease over a 10-year period.
Risanamento will initially fund the reclamation of the site, with Lendlease reimbursing the amount upon completion. The project will then be divided in 12 sections with Lendlease taking control as development manager in several steps. The Australian owner will pay an initial €15 mln for the plots and will be in charge of financing construction of each section as development progresses.
The agreement is conditional on approval from the Milan municipality of the new masterplan as well as on the restructuring of Risanamento's €600 mln work load from its financing banks.
In a statement, Risanamento said that the Santa Giulia project is forecast to generate earnings of €2 bn over the entire development cycle. Development cost are estimated to be around €1.2 bn.
The operation follows the signing of a similar agreement in June between Risanamento and Lendlease for the development of the Southern lot including the Sky complex.
Risanamento had given Lendlease exclusivity until 31 October regarding the potential acquisition of the development site, its only remaining asset after having been forced to offload the bulk of its portfolio in an attempt to restore its finances.
In 2014, it sold most of its French office portfolio to a partnership of UK investor Chelsfield Partners and the Saudi Olayan Group for over €1.2 bn, net of taxes. Similarly, it sold 18 Avenue des Champs-Elysées in Paris to Pramerica Real Estate Investors for €135 mln as well as its massive Falck development site in Milan’s San Giovanni district.
