27 November, Il Sole 24 Ore
The portfolio of the US fund Blackstone, one of the biggest global real estate and private equity investors, has got an offer from China. The fund, assisted by the advisors Rothschild and Jones Lang LaSalle, is allegedly negotiating with a Chinese group concerning the sale of its outlets.
According to Il Sole 24 Ore, the group Sasseur is among the competitors. The company is listed in Singapore, although it holds several outlets in China. The Asian group doesn’t have assets in Italy yet, and it aims at expanding in Europe through acquisitions. This might be the right opportunity.
The group has currently ten outlets in China in the cities of Chongqing, Nanjing, Hangzhou, Hefei, Kunming, Changchun, Xi’an, Guiyang and Changsha, with total investments amounting to 20 billion renminbi and a total surface of 2 million Sq m.
According to the rumours, Blackstone has assessed its outlet portfolio as worth 800 million euro. This would be the first operation for such a high amount on the Italian market in the past few years.
Price will be critical, as the success of the operation will depend on how much the Chinese are willing to spend.
The Blackstone asset portfolio is distributed throughout Italy, and it includes the Outlet Villages in Franciacorta, Matua, Palmanova, as well as the Puglia Outlet Village in Molfetta and the Valdichiana Outlet Village.
The outlets occupy a total surface of 150 thousand Sq m distributed among 600 stores. They represent a quarter of the national outlet market, considering that the surface of total outlets present in Italy is 630 thousand Sq m. The five outlets receive 17 million visitors every year.
The assets were acquired by Blackstone through four different transactions starting from 2013-2014 and have been gathered under the brand Land of Fashion.
The US fund was supported in the transactions by Kryalos, the company managing the Italian real estate investments of the American company. The investment horizon for Blackstone was 4-5 years. Therefore, it’s easy to understand that the fund wants now to disinvest. The Italian portfolio has got the attention also of other international funds, although the Chinese investor is currently at a more advanced stage of the negotiations.
This is not Blackstone’s first divestiture operation in Italy. The US fund has already sold to the Swiss fund Partners Group a smaller portfolio composed of six shopping arcades of small and medium dimensions.
It’s still hard to say whether the transaction would be successfully completed or not. Two factors might impact the result. One is the country risk represented by Italy which has raised in the past few months due to the confrontations between the Italian Government and the European Union. The other reason is the promise of the Five-Star Movement to close shopping centre on Sundays.
Although nothing is defined yet, the only intention of politicians to close shopping centres on Sundays has made more uncertain the investment strategies of the international funds in the country. For instance, the call for tenders for the restaurant chain Old Wild West, present in many shopping centres, has been suspended. The shareholder Bc Partners was looking to sell the restaurants but had to pause the operation, although it had received already offers from some private equity funds. The shareholder preferred to see how the Blackstone operation will turn out to understand whether to proceed or not with the transaction.
Source: Il Sole 24 Ore
Translator: Cristina Ambrosi