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Generali, shopping in real estate
10 March, Il Sole 24 Ore
A small collection of modern towers symbolizes the change of the insurance group Generali in its approach towards real estate.
The City Life towers, the one where the group is going to move 3 thousand employees in July and the one under construction for PwC, the Défense building in Paris for Saint Gobain. Moreover, One Fencourt in London built and delivered to its tenants and the fourth tower that might be built in the former expo area in Milan. This is only a residual part of the 26-billion-euro real estate portfolio held by Generali, but it reflects the change. The assets, that combine trophy assets of great value accumulated through the centuries and modern buildings, was managed in the past in a very conservative way, without venturing too much from a 3.5-4% yield that many deemed too cautious.
The arrival one year ago of Aldo Mazzocco in the real estate division caned the course. Not a revolution, rather an evolution. “We want to implement a plan – explains Mazzocco – that will replace the whole real estate activity of the group. We’re present in 14 countries with our portfolio, we want to have a neater approach and focus on the first 15-20 European cities. Here, we operate through the direct management of the properties, while outside Europe we’ll invest in finds of funds and we’ll create platforms with the local partners”. Mazzocco bets on Asia, namely Japan, Singapore, Australia and South Korea, and China in a later moment. The main focus is on offices, but “there are opportunities worth to be explored in shopping centres or to consolidate in logistics”, he explains. The portfolio of the group is focused at the moment on offices for 57% (20% in retail, especially high street, 13% in residential and 5% in logistics and other segments), it’s located for 33% in Italy (about 8.5 billion), for 27% in France and for 18% in Germany.
“The goal for the next three years is to increase the managed assets by approximately one-third (reaching 35 billion), according to an asset management strategy based upon the creation of real estate funds dedicated to the companies of the group (nowadays the direct owners), but they’ll be also open to third parties to whom the funds will be gradually transferred. Our asset management will become Pan European”. The first fund that has been launched is called Geih and it’s focused on offices and high streets in Europe, it’s worth over one billion and it aims at 2.5 billion. It includes assets such as Champs Elysées 100 in Paris, Wenceslas Square in Prague and the Sono West offices in Frankfurt. The portfolio may include in the future also City Life. Gear is about to be launched, it will include Cordusio, Via Meravigli and the big complex in Via Ugo Bassi for 45 thousand Sq m near Porta Nuova to be requalified. Nowadays there are eight funds, spanning from debt to logistics, from shopping centres to high street.
“The portfolio will be very widely diversified – says Marzocco. – we’ll opt for a continuous evolution of the management.” The objective is also to increase the returns of the portfolios with a new rotation of the properties. For this purpose, in 2017 the group made acquisitions for 1.28 billion (500 million in 2016).
Diversification also means a gradual, and cautious, placement on the London market. But Milan remains the main target. Here, Generali owns properties for 3 billion. And many projects concern the city. One of this is the next phase of City Life, with a new residential development signed by Libeskind. Along with the delivery of The Corner, in Viale della Liberazione, there will be also the Versace headquarters. Inter might move here too, according to the rumours, joining the list of well-known names present in the area.
Source: Il Sole 24 Ore
Translator: Cristina Ambrosi