Dutch pension fund asset manager PGGM and real estate fund manager Hines have formed a joint venture to invest in retail and office assets in Milan.

The ‘separate account programme’, which will include co-investment from Hines, has an initial equity commitment of €155m and has already acquired a €110m portfolio.

Hines and PGGM said they will target high-street retail, office and mixed-use developments in prime locations in the centre of Milan.

They will also pursue a sustainability strategy by refurbishing assets to meet international energy-efficiency standards.

The intital portfolio of three buildings was acquired from Banco BPM. They include the 10-storey Piazza Liberty tower, and two buildings on Via del Lauro and Via Mazzini.

The three assets provide a mix of retail and office amenities with a total surface area of 20,000sqm. The buildings will undergo a €30m refurbishment and renovation programme.

Tinka Kleine, senior director for private real estate for PGGM, said: “Milan has become part of our city focused investment programme because it offers great investment opportunities, both for achieving attractive financial returns and for improving the sustainability performance of well-located assets.

“Hines’ track record in securing and executing such strategy provides a perfect base for a successful partnership in Milan.”

Lars Huber, CEO of Hines Europe, said: “Hines and PGGM have a long relationship, developing real estate together since the 1980s.

“PGGM are a trusted, highly respected partner and we are pleased to be extending our relationship through this account. We are pleased to have launched this account in parallel with the first joint acquisition, and look forward to growing it further.”