Allianz Re buys the Kensington fund

 

Allianz Real Estate has completed the acquisition of 100% of the shares of the real estate fund “Kensington”, under the name and on behalf of several German companies of the Allianz group. The fund is managed by Kryalos Sgr and has been sold by the real estate funds controlled by  Blackstone Real Estate Partners Europe (with the assistance of the advisor Vitale&Co). With this acquisition, Allianz adds two new primary properties located in the Porta Nuova area in Milan, “Gioia 26” and “Porta Nuova 21”. The former, in number 26 of Via Melchiorre Gioia, accommodates the Italian headquarters of General Electric, Gilead, and Multi Corporation. The latter, located in number 21 of Bastioni di Porta Nuova, will accommodate Spaces, a company of the Regus group (flexible spaces for companies). “Kensington will allow Allianz to access a new type of owners that we consider very interesting in terms of steady returns to our investors, for the intrinsic characteristics of the properties as well as for the target these properties can interest to. Milan confirms its key role in Europe”, comments  Mauro Montagner,  Allianz Real Estate Southern Europe Ceo.

 

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

 

100 million in real estate to Prelios

 

Prelios Sgr, a company of the Prelios group, has bought two properties in Rome and in Milan: the two operations increase by approximately 100 million euro the asset under management of the company. The one in Rome is a real estate complex located between Viale Regina Margherita, Via Morgagni, and Piazza Sassari, for a value of 62.75 million euro after taxes and duties. The property in Milan is a building of over 11 thousand commercial Sq m in number 59 of Via Amedeo for a total value of 33 million after taxes and duties.

 

Source: Corriere della Sera

Translator: Cristina Ambrosi

Real estate, record semester in Italy for commercial properties

 

Record growth of the real estate market in Italy in the first half of 2017, with investments in commercial properties, spiked at 4.9 billion euro, increasing by 40% compared to the same period of 2016. This is the best semester ever.

According to Cristiana Zanzottera, Research Department of BNP Paribas Real Estate, the current situation in Italy is particularly positive for the commercial real estate with investors ready to close the operations even for minor locations or for less liquid products as long as the asset is good.  “A big contribution to the 4.9 billion euro result of this semester came from the closing of the Scarpellini portfolio for a value estimated around 415 million euro as well as the acquisition by Credite Agricole of 40% of Beni Stabili. All operations that show a general interest in the national real estate”, says the expert.

Office, retail and alternatives trends

In more detail, the office segment registered also for this semester the majority of the total volumes with about 2 billion euro investments (42% of the total) with  31 operations altogether including 6 portfolios. Also, the retail segment performed well, totalling in the first part of the year about 1.2 billion euro, the double compared to the same period of last year. Not to mention also some transactions in the alternative investments segment and particularly in nursing homes.

The weight of foreign capital

Regarding the origin of the capital, the Italian market has continued to attract international capitals also this year. According to BNP Paribas Real Estate, 60-70% of the investments in the first semester concerned foreign capital. “In the first half of 2017 we have registered a significant increase of European capitals compared to the figures of the previous year referring to the same period”, continues Zanzottera. “The German investments have doubled while those from Britain and France have considerably grown. Also, the capitals from United States have increased (+10%), even if in a more contained way.

Return decreasing for retail

The retail segment is particularly dominated by foreign capitals, which represented in the first semester of 2017 the 75% of the total investments”, explains Zanzottera, according to whom the prime net returns have decreased in the first semester, with 3.15% for Milan High Street and 5% for Shopping Centres.

 

Source: http://www.advisoronline.it/private-banker/strategie/43297-real-estate-semestre-record-in-italia-per-gli-immobili-commerciali.action

Translator: Cristina Ambrosi

Bain’s move and the race of USA funds to Italian credits

 

They must see some interesting potential. To do so, they buy “servicers”, companies operating in the management and collection of banks’ bad loans weighing on their books. Bain Capital has been launched a couple of days ago and bought a non performing loans portfolio for a value of 383 million from  Banca Mediocredito del Friuli Venezia Giulia. In February, the American company took over the servicer Aquileia Capital Services from Hypo Alpe Adria, entering in this way in the NPL management market. The first operation is recent. The USA fund Lone Star has just acquired the servicer CAF. Also, the European Arrow Global Group, one of the biggest international operators specialized in the purchase and sale of NPLs, has bought the Italian Zenith Service for 17 million. Finally, Unicredit with its operation has transferred 17.7 billion euro bad loans to the vehicle companies Fortress (which took over first Italfondiario and then Uccmb, merging them into Dobank) and Pimco for the securitisation.

All this activity is due to the will of the banks to open their books and put on sales their most attractive bad loans, namely those secured by real estate. The Rainbow project, through which Banco Bpm sold about 700 million secured debt backed by exclusive properties (then transferred to Algebris), saw the interest of  Blackstone and Cerberus.

 

Source: Corriere della Sera

Translator: Cristina Ambrosi

Bauer Grand Hotel sold to Elliott

 

The hospitality group Bauer, as well as the owner of the exclusive Bauer Hotel in Venice on the Canal Grande, has been sold. The US fund Elliott and the London based financial group Blue Skye have taken over the majority. The two investors will have 75% of the shareholding structure, while the Bortolotto Possati family will have the 25 per cent. However, the President of the group will be still Francesca Bortolotto Possati, niece of Arnaldo Bennati, the successful shipbuilder from Liguria who bought the hotel in 1930 from the Bauer-Grünwald family. The business plan includes some important additional investments: about 100 million to renovate the hotel and bring it to the highest international standards. There is also a tender to assign a big international chain to manage the hotel, this process, managed by Cbre, would see Four Season as in pole position.

The same Elliott and Blue Skye took over and renovated Bauer group’s debt last year: about 120 million euro. The advisors for the operation have been the lawyer  Riccardo Agostinelli from the firm  Gattai Minoli Agostinelli as well as the firm Giano Origoni Grippo Cappelli. From its side, Elliott is surprisingly active in Italy: after its entrance in Ansaldo and the funding of Milan FC, the group from the US is taking also part to the tender for Alitalia.

 

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

 

Atlantic2 sells offices in Rome and redeems 13.5 euro per share

 

Atlantic2-Berenice, the real estate alternative closed end investment fund managed by the asset management company Idea Finit and listed on the Miv segment of the Italian Stock Exchange, has finalized the definitive contract for the sale of the entire building, property of the fund, located between number 275-279 of Viale Regina Margherita, number 30 of Via Morgagni, and number 2 of Piazza Sassari in Rome. The property is mainly constituted by offices and it features three buildings and a shared three levels basement. It was sold for 62.75 million plus taxes. The transfer price generated a capital gain of 2.03% compared to the appraisal by an independent expert registered in the bi-annual report dated 30th June 2017 (61.5 million). After the sale, the Board of Directors of the company approved a partial redemption of 8.1 million in total corresponding to 13.5 euro for each of the 600,003 shares issued by Atlantic2-Berenice with the payment due on the 16th August 2017. The fund will also reimburse partially in advance the funding of the property sold for an amount of 38 million.

 

Source: Milano Finanza

Translator: Cristina Ambrosi

Unipol, the Stock Exchange approves the bad bank

 

The bad bank plan weights on the biannual report of Unipol, but the Stock Exchange approves it with the securities of the holding (+2.32%) and of Unipol Sai (+0.96%) both rising. The insurance company closes the first semester of 2017 with a loss of 390 million euro due to “the effects of the restoration plan of the banking division”, which implies a strengthening of the coverage of the impaired credits and the creation of a bad bank. However, net of the adjustments, the profit should have been 390 million euro, growing compared to the 276 million of the first semester of 2016.

In detail, for what concerns Unipol bank, the adjustments on credits and other financial activities totalled 396 million, this has brought the coverage of bad loans to “excellence levels, with 80% for the bad loans, 40% for the unlikely to pay, and 70.4% for the impaired credits in total. This operation prepares the path for the announced creation of the bad bank of Unipol, a company that will receive at the beginning of 2018 3 billion NPLs and of which Unipol and Unipol Sai, current partners of the bank, will remain its shareholders in order to manage and collect the impaired credits. The negative effects on the bi-annual results of Unipol will be reabsorbed at the end of the year with the transfer to Unipol Sai of Linear and Unisalute, in an operation among correlated parts, for a total of 875 million euro. In this way, “the return perspectives will remain basically unchanged” for what concerns the financial year of the holding. “We expect for the next three year for the bank alone a growth with a profitability of 7-8% at the conclusion of the plan”, stated the Unipol managing director, Carlo Cimbri in a conference call with the analysts, “as long as the bank stays within the group” since there is still the intention to find a partner.

A considerable clean up, therefore, that has had its effects also on Unipol Sai, that, despite closing positively the first semester of the year with a profit of 282 million, slightly more than the 280 million of the same period of the previous year, had to take into account the negative impact amounting to 150 million connected to the restoration of the bank. During the semester the collection has dropped from 6.7 to 5.6 billion, a fall connected to the life segment (-36,4% with 1,9 billion), opposite to a steady trend for the damage one (-0,3% with 3,7 billion), and with a combined ratio set at 96.1%  (97.9% net of reinsurance). The solvency indicators have improved with an individual solvency ratio risen to 256%, from the 243% at the end of 2016, and the consolidated solvency ratio based on the equity gone from 212% to 218%.

Source: http://mobile.ilsole24ore.com/solemobile/main/art/finanza-e-mercati/2017-08-05/unipol-borsa-approva-bad-bank-081148.shtml?uuid=AEtK2G9B&refresh_ce=1

Translator: Cristina Ambrosi

Idea Fimit aims at substandard loans

 

The collection goal should be 200-300 million and the offered return around 12%. With the approval from Consob, the launch is expected for September

Idea Fimit doubles on real estate funds that bet on bad loans. After the vehicle dedicated to non performing loans, the company is launching now a new vehicle for substandard and restructured loans. According to Milano Finanza, the asset management company should have got the green light from Consob to market the new fund Special Opportunity I, designed to invest in non performing exposures other than bad loans, secured by real estate. For this second adventure in the real estate funds, the company led by the Ceo Emanuele Caniggia is aiming at a collection of 200-300 million, offering a return around 12%. Gained the necessary authorizations before the summer break, the fund should be launched in September with the start of the collections, targeting only institutional investors. The vehicle is supposed to operate on, but not exclusively, securitized credits. As already mentioned, the company will invest in secured substandard and restructured loans, in order to take advantage of its expertise in the real estate field.

The doubling in the alternative investment funds world should happen then after a little bit more than one year the first initiative, launched in May 2016: Idea npl, the fund dedicated to non performing loans. The first operation of this vehicle was on a non performing loans portfolio of about 22 million over 100 collected. Nearly at the closing, there should be in the pipeline also other operations for 20 million, among which two deals related to some secured credits within Unicredit and Intesa Sanpaolo. The goal is to close the collection of this fund with 130-150 million by next autumn.

In the meanwhile, the non performing market gets more and more crowded with national operators. Another asset management company, Sorgent, has recently launched its vehicle dedicated to NPLs, Pinturicchio, with a collection target of 150 million. On the other hand, with the increasing transfer operations by the banks, also the occasions for real estate asset management companies are increasing, as they can avail themselves of their expertise in the field for the credit collection phase. Not to mention that the prices of these packages are expected to drop. According to the last Market Watch by Banca Ifis at the end of July in fact, “the average prices of the secured portfolios (guaranteed by real estate) show a sharp fall after the pick at the end of 2016”.

In the second quarter of 2017 in particular, the average price fell to 33% as “a consequence of an increase of the offer for this market segment”.

 

Source: Milano Finanza

Translator: Cristina Ambrosi

Banks: Abi estimates net bad loans are to decrease by 30 billion and CET1 will fall to 13% by the end of 2019

 

 

A reduction of the bad loans stock within the Italian banks, but also a better profitability and an increased property ratio. Abi estimates for the next three years an improvement in the overall quality of banks’ assets with a yearly average reduction of 15% of the net bad loans, together with a reduction of 40% of the ratio between net bad loans and investments within three years. The forecasts by the Abi Research department, carried out in collaboration with the main banks operating in Italy, expect also an increase of the loans with over 140 billion more between the end of 2016 and the end of 2019.

Bad loans dropping by 15% per year                           

The bad loans stock should fall by 30 billion in the mentioned period (equal to 35% of the stock at the end of 2016). Three-quarters of the bad loans are supposed to belong to companies. In this way, the ratio between net bad loans and total investments should maintain the same trend and continue to reduce continuously and considerably in the next three years: by the end of 2019, this ratio is expected to set at 2.7%, nearly two points less compared to 2016. A potential acceleration in the disposal process of non performing loans might accentuate this trend, determining a further reduction of the bad loans/investments ratio

The stabilization expected from the credit risk reduction process, driven by a significant improvement of the credit quality of the companies, should induce a faster growth of the investments: in the next three years, the stock of credit granted should increase of about 140 billion euro, with an average yearly variation of 2.6%. Considering only the performing loans, net of the outflow of the bad loans, the average growth rate of the investments should be equal to 4%.

Growing capitalization and profitability recovery

Abi sees a strengthening in the property indexes. After the reduction registered in 2016, they will resume their growth: by the end of 2019, the Cetl ratio will set at 13%, 1.5 percentage points more compared to the end of 2016.

The start of a new positive trend for the interest rates should limit the depressive effects on the interest margin which, in this way, can take advantage of the growth, even though contained,  of the brokering activity. The total return should grow according to the average annual rate of 3.6%.

If compared to 2016, the totality of the operational costs should reduce for each year in consideration, plus minor charges accumulated, for a reduction of over 5 billion euro throughout the entire period (over 10% less). A good part of this reduction should be due to the lack of extraordinary charges related to the termination interventions on companies as well as the effects of early terminations of employments.

By the end of the period in consideration, the cost/income ratio, showing the efficiency of management, should be equal to 58%.

The forecast concerning the adjustments and provisions flows represent the true force driving the improvement in management profitability. If in 2016 the provisions took assets for almost 36 billion euro (equal to 170% of the operating income), in the three years in consideration this outflow should decrease and reach an average yearly value of 19 billion euro, equal to 65% of the average operating income for the 2017-2019 period.

“In the overall, the income volume will recover considerably from the low levels of 2016, and a strict control on costs and a significant improvement in the cost of risk will permit a good recovery of the profitability. The Roe, namely the net equity, is expected to grow constantly throughout the 3-year period, and by the end it will set around 2.8%, increasing by over 7 percentage points compared to 2016, even though still below the before crisis levels.

Gdp +1.3% this year and steady growth in the next two years

The Abi Research Department estimates for this year an additional growth of the national economy. The growth of the Italian Gdp is assessed for 1.3% and it will keep this level also for the next two years. The scenario forecasted by Abi sees the budget operations following a path coherent to this cycle: by the end of 2019, the debt/Gdp ratio will be decreased by nearly 5 percentage points compared to the previous year.

Source: http://www.finanzaonline.com/notizie/banche-abi-vede-sofferenze-nette-giu-30-miliardi-cet1-al-13-fine-2019

Translator: Cristina Ambrosi

A significant interest for the Carige bad loans

 

Over 1.4 billion on sale, besides the managing platform

Banca Carige will present at the beginning of September the new industrial plan. In the meanwhile, the bank has started the transfer process of its assets for which it’s expecting an income of approximately 200 million. The plan includes the transfer of a tranche of its NPL  portfolio, for which a data room has been set up with performing loans totalling 1.4 billion euro. Yesterday, the Ceo of the bank controlled by the Malacalza family (17.58%), Paolo Fiorentino, showed the advancement of the asset strengthening actions of the bank from Genoa, which will be completed by a capital increase of 500 million expected by mid-September together with the assembly of the shareholders. The action will be focused on transferring the NPL portfolio, the platform to manage the bad loans, as well as some exclusive real estate assets, and 100% of Creditis, the consumer credit society and the merchant book business ( the collection services on Pos terminals).

“We have received – said Fiorentino – a lot of interest on the NPL portfolio that we have put in the data room and it is bigger than the one previously announced as it’s for a value of 1.4 billion rather than 1.2 billion. Our NPL management platform is also getting a lot of interest, and we have already identified the target investors for it, namely operators already active on the market”. “Carige”, declared Fiorentino, “will avail itself of the platform in the future as external servicer for selected impaired portfolios (the remaining 1.2 billion NPLs that the bank has to manage). Even though the NPL s and the platform, in theory, could be transferred separately, Fiorentino stressed how “all the potential buyers are looking at the two assets together. Who buys the portfolio and the platform, however, as a matter of fact, he’s buying also an option for the future transfers that we will do on another portfolio”. The combination of the capital increase for 500 million and the transfer of assets for 200 million, will enable Carige, said Fiorentino “to collect two points and a half of the Cet1”. That doesn’t consider though the sale of the NPLs portfolio, has specified the Ceo, which represents a “minus” at the moment not exactly quantifiable.

According to Fiorentino, it’s possible that the investors that will buy the bad loans of Carige will take also part in the capital increase but, he added, he doesn’t see any “white knights”. He continued, “I know many of these funds and with some of them we are discussing the possible interest in participating at the capital increase. In that case, these participations will be of financial nature and not strategic”. For what concerns the real estate, the bank put on sale eight properties (among these two in Milan, two in Rome, and one in London), for which, said Fiorentino, both international and Italian investors showed interest. The Italians are particularly interested in the building in Corso Vittorio Emanuele in Milan. The real estate assets of the bank amount to 800 million, according to the book value. Of these,” a significant part, about 600 million, are instrumental assets, offices, and branches”. The Ceo excludes additional transfers outside the eight buildings.

Fiorentino remembered that the industrial plan that will be launched in September will include as well a staff reduction and that a quota of the capital increase will be destined to “manage the exit plan of the senior personnel”, Fiorentino said that there is “no disagreement” between the Carige shareholders  and that “any decision hasn’t been taken yet” concerning the possible conversion of the Generali bond. Finally, concerning the future of Carige, he clarifies, “it will make sense to take part in the stabilization process only if seated at the right side of the table”, that means “the one that discusses, not the one who is being discussed!”, Carige “in a potential integration process, would immediately benefit in terms of capital”. Yesterday the stock closed with 0.25 recording +10.72%.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi