German real estate investor Union Investment has made its debut in the Milan office market with the acquisition of a historic downtown property from Italy's Coima.
According to IPE Real Assets, the deal volume for Piazza San Fedele 1-3 is understood to be just over €200 mln.
The transaction will take the form of the creation of a new SICAF investment vehicle on behalf of Union Investment and managed by Coima, aimed at investing in prime sustainable assets, and expanding its scope with further acquisitions in the Italian market.
The Piazza San Fedele 1-3 office building is located in Milan’s historic business district and has been disposed by the Qatar Investment Authority (QIA) Italian property fund, managed by Coima.
The historic building, which is undergoing a refurbishment aimed at modernising the workspace and improving its sustainability credentials, is centrally located in the Duomo area, close to Milan Cathedral and La Scala opera house and directly adjacent to the Galleria Vittorio Emanuele II shopping arcade.
Coima has agreed a deal with global fashion and luxury goods brand Bottega Veneta to lease the office upon completion of the redevelopment in Q4 2023.
Kering-owned Bottega Veneta will set up its global headquarters in the building, taking 10,000 m2 of space over the building’s nine floors in a 12-year lease.
Martin Schellein, head of investment management Europe at Union Investment, said: 'As Italy’s main commercial centre and one of the world’s leading fashion and design capitals, Milan offers excellent conditions for investments in the office sector.
'With its prestigious location in the historic city centre, high sustainability standards and long-term lease to Bottega Veneta, Piazza San Fedele 1–3 is the perfect first investment for our anticyclical entry into the Milan office market.
'We look forward to continuing our cooperation with Coima, who will manage the Italian fund vehicle set up for this purpose on our behalf.'
Coima purchased Piazza San Fedele 1-3 on behalf of the Qatar-backed QIA Italian property fund in 2018. The fund’s portfolio currently includes direct investments for a total of six properties in Milan comprising approximately 40,000 m2.
Union Investment is acquiring the project through Unilmmo: Deutschland, an open-ended real estate fund, from the QIA Italian property fund in an off-market transaction.
Piazza San Fedele dates from 1872 and was originally home to the Teatro Manzoni theatre. It was redeveloped as an office following the Second World War when it suffered extensive damage.
The current refurbishment, led by architect Studio Asti Architetti, is designed to modernise the building while preserving and enriching its original features.
The project envisages achieving LEED Gold and WiredScore Platinum certifications thanks to the application of sustainability best practices with a 'brown to green' transition.
Said Gabriele Bonfiglioli, Coima’s chief investment officer: 'The sale of this historic office building following a sustainable refurbishment represents the most significant transaction in the Milan office market this year.
'The deal confirms the continued strong demand from international tenants and investors for future-proofed sustainable buildings in central locations with strong amenity offerings.
'The acquisition represents the conclusion of our business plan for the asset, with a return for our investor of over 18% IRR.'
The highly sustainable project also entails the complete redevelopment of Via Carlo Cattaneo, the portion of Via Silvio Pellico that goes from the Galleria to Piazza Duomo, improving the public realm and street furniture in the historic Milan neighbourhood.
Coima was advised by Shearman & Sterling and Maisto & Associati, while Union Investment was advised by DILS, DLA Piper, McDermott and Aecom.
