Prelios: growing trend of non-residential investments

06 June, Il Sole 24 Ore

The Italian non-residential sector reported in the first three months of 2019 investments for 1.6 billion euro. The sector is driven by offices (57.4% of the total), followed by hotels (23.5%), and logistics (6.6%). The remainder is constituted by retails assets (3.1%) and mixed-use properties.

Milan attracted investments for 900 million euro, while Rome registered 150 million. Foreign investments dominate the market with 1.1 billion euro (72.5% of the total).

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

 

Foreign capitals to relaunch Milan real estate market

13 June, Il Sole 24 Ore

Bnp Paribas real estate reports that 931 million euro has been invested in the first three months of 2019 in Milan, 762 million of which in the office segment only.

The city is undergoing several requalification projects, with Santa Giulia and the former Expo area among the main ones. Neighbourhoods and suburbs are going through major changes. Many of these projects see the involvement of international players which focus on value-added and development operations.

In Milan, requalification projects concern a total surface of four million Sq m.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

New international investments in Veneto

29 March, Milano Finanza

In Lido di Venezia, the conversion of Ospedale al Mare into a resort by Cdp/TH Resorts e Club Med and the renovation of the Excelsior Hotel and Des Bains by Coima are the main real estate operations concerning hospitality.

Regarding logistics, in the Verona area, the German e-commerce group Zalando is to open a second logistic hub in Italy, while the logistic facility owned by Fondo Go Italia Il and managed Dea Capital Real Estate Sgr will be expanded by other 190 thousand Sq m.

The retail segment suffers from the rise of e-commerce, but it’s supported by new openings such as the Gruaro Retail Park for 25 thousand Sq m (property of Numeria Sgr with Fondo Tolomeo) and the shopping centre Montello Hill for about 48 thousand Sq m (Ca.Bi Srl).

Source: Milano Finanza

Translator: Cristina Ambrosi

Big hotel chains are growing in Italy (+6.4%)

13 February, Il Sole 24 Ore

Big hotel chains in Italy are expanding and consolidating, especially for what concerns those of the medium-high range, thanks to the growth of tourism. In 2018 the number of hotels belonging to hotel chains (namely groups consisting in four hotels or more) reached 1,600 properties (+6.5% from 2017) for approximately 172 thousand rooms in total (+4.7%). These figures correspond to 4% of the total hotels and to 15.8% of the total rooms. There are currently 240 brands, 143 of which are domestic brands, the remainder is international. The data are taken from the sixth edition of the report  “Hotels & Chains” by the consulting company Horwath which was presented during the event organised by Confindustria Alberghi at Bit in Milan.

The Italian hospitality market is composed of 32,988 hotels and over 1 million rooms. And the demand continues growing. “We expect to reach 1.4 billion visitors globally”, said Confindustria Alberghi president Giorgio Palmucci, who also made his debut as freshly-elected Enit president. “Italy continues being the first destination searched on Google around the world”, stated Furio Gianforme, Travel Industry Head for Google Italia. As Cbre recently announced, there are plans for new investments, after the company invested 1.321 billion last year in the hotel segment. Cbre expects in 2019 “a solid growth and investments by international companies, including large hotel chains”.

Hotel chains are playing a crucial part in raising the level of the offer higher and, in the meanwhile, in consolidating a sector which is still fragmented in many small properties, most of which are family-run and directly managed. In France, hotel chains represent 21% of the total, 33% in Spain. Italy is still behind. However, “the quota reaches 50% in the five- and four-star segment. That’s where hotel chains are growing the most”, said Giorgio Ribaudo, project manager for Horwath. “The sector will develop in the direction of five- and four-star hotels. According to the outlook, by 2022 there will be  120 new hotels and 15,700 more rooms belonging to hotel chains”.

Starhotels is one of the most dynamic hotels. The Howarth report places the company first in Italy in terms of sales. “We closed 2017 with 200 million, and the accounts for 2018 have reported an additional growth between 4% and 7%”, said Starhotels general director Enzo Casati. For the 2018-2020 period, the brand from Florence has budgeted investments in renovation works for about 16 million euro on various prime properties.

By the first quarter of 2020, the company plans to open a new hotel for 200 rooms at Fico Eataly World in Bologna. “Always in 2020, we will open in Milan a luxury residence with view on Duomo. The property will be composed of various penthouses of 145 Sq m, addressing the emerging demand for apartments”. Another player in the industry is Una Hotels (Unipol). This year, the company will inaugurate Principi di Piemonte in Turin and a new four-star hotel in Milan by 2020.

Blu Hotels is another very dynamic company. The Brescia hotel chain owns 30 facilities including resorts and four- and five-star hotels with investments for 15 million euro distributed between remodelling works and new openings. Blu Salento Village, managed by Blue Hotels, will re-open this year. The property is owned by the fund Fit of Cdp Sgr (acquired for 23 million). Furthermore, the fund of Cdp in 2018 invested 150 million between direct acquisitions, shares and renovation works. The directly-owned resorts are six at present. “We’ve already identified the seventh asset. We’re about to close the deal”, said Alessandro Belli, head of the real estate-tourism for Cdp Sgr. Among the new brands, there are Lindbergh Hotels, a spin-off of Eden Viaggi, the tour operator which was sold to Alpitour. The brand will be directly developed by Eden founder Nardo Filippetti, who is still in charge of the hospitality division.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

Investments in student housing increased by 7.6% in Europe

27 October, Milano Finanza

The simple little rooms with shared bathroom are long gone. The new-generation student accommodation features functional furniture, mini apartments equipped with any sort of comfort, common spaces, gyms, bike sheds and laundry rooms. They are actual places where to live, and not only where to study and work. Alessandro Ghisolfi, head of the Abitare Co. research centre, comments: “It’s the sign that the segment is attracting an increasing number of big real estate investors, investment funds, insurance companies, sovereign and retirement funds. These operators can provide a quality product meeting the needs of Europe’s growing student population whose yearly growth rate is higher than 5%. According to the figures, the European market is expected to reach 8 million students by 2025. In 2017 the global investments in student housing were equal to 15 billion euro, 7.6 of which only in Europe, the geographical area that registered the sharpest increase, +27% from 2016.

The UK was the first country to realise the opportunities offered by the segment, starting to promote already 15 years ago properties of high to medium quality which provided excellent returns (6.6% yearly gross average). In France, Germany and Spain, the average returns go from 5.5% to 7.5% gross a year. Ghisolfi continues: “The potential growth of the student population is an element that investors take greatly into consideration, as well as the quota of international students. Another factor is the prestige of the university”. The chart of the Times World University Ranking places the UK first with 40 cities included in the chart, followed by Germany (23 cities), Italy (12 cities), France (6 cities) and Spain (4 cities). Ghisolfi comments: “For what concerns Italy, although no increase of the student population is the expected in the near future (on the contrary, it decreased by 1.4% in 2016 from the previous year), the chronic lack of offer for student accommodation and the higher rents led to evaluate the opportunities of this segment. This trend mainly concerns big cities such as Milan, Rome, Turin, Bologna and Florence”.

Among the new projects, there is the one of the Dutch The Student Hotel (Tsh), which inaugurated in June a luxury student hall in Florence, overhauling and requalifying the historical Palazzo del Sonno, formerly the Ferrovie dello Stato offices.  The facility doesn’t cater only students but also to young travelling professionals. It features a terrace with a swimming pool on the top floor offering a panoramic view of the city. Tsh has already announced the opening of new similar facilities in Bologna and Rome. A new campus will open in Milan near Bocconi, featuring a gym, a swimming pool and a cinema. The construction is meant to be completed by 2020, offering approximately 600 beds. The initiative is brought by Hines which invested 85 million euro in the project. Aparto has been appointed for the management of the facility. Hines is intentioned to pursue its strategy in student housing with other projects in Rome, Florence and Venice.

Source: Milano Finanza

Translator: Cristina Ambrosi

Investments for 9 billion in commercial properties expected for 2018

26 October, Fashion Network

Investments for 9 billion in commercial properties are expected for 2018. The data reports a slight decrease from the record result of 2017, but it’s above the average registered in the last five years. In the first months of the year, 5.3 billion euro were invested in commercial properties in Italy.

This is the picture emerging from the Coima Real Estate Forum which saw the participation of 200 operators of the sector, representing about 50 investors, for large part international, and asset valued 2 trillion euro.

25% of the capitals originate from the domestic market, while 75% comes from the international markets: North America (24%), France (10%), United Kingdom (9%), Germany (8%), Asia Pacific (3%), and the remainder of the investments are fractioned among smaller markets (21%).

Coima, the real estate investment company founded by Manfredi Catella, aims at total investments for over 3 billion euro in the next five years, focusing on real economy, offices, residential properties, logistics, tourism and urban requalification.

Source: Fashion Network

Translator: Cristina Ambrosi

Tourist apartments and the credit crisis

22 October, Il Sole 24 Ore

Tourism is one of Italy’s biggest resources, but also a problem concerning indebtedness, as many businesses are not able to pay back the bank loans, and the loans become NPLs. 10% of the non-performing loans in Italy are backed by hospitality assets, a rather high percentage. These figures have been disclosed in a survey by Deloitte and Gma (a company operating in credit management), showing a worrying scenario. The current value of NPLs secured by hospitality assets in Italy is equal to 13-15 billion. At the same time, the investments in the industry amounted to 1.6 billion, 60% of which by international investors, corresponding to 1.1 billion. On the overall, the investments grew by 7.2% in 2016. The increased interest in investing in the sector might turn the NPL issue into an opportunity for tourism and the national economy in general.

“At present, the NPL market is very active. Besides, we’re also assisting at the development of the UTP market (unlikely to pay). The stock of bad loans will reduce in a couple of years thanks to transfers and cancellations, resulting in a reduced offer for alternative investments” – commented Umberto Rorai, Deloitte partner. – Transactions for hospitality assets has been over 18 billion euro in the past few years, and they have been growing reaching peaks of 15% in terms of volumes”.

Banks and servicers sometimes don’t have the necessary skills to manage such credits. “An NPL collateral can be represented by various assets. Hence, they require a different approach and servicing depending on the category”, commented Emanuele Grassi, Gma Ceo.

Riccardo Serrini, Prelios Ceo, explained: “Prelios Credit Servicing manages at present over 250 hospitality assets put as a guarantee of NPLs”. Why all these difficulties then, considering that Italy is one of the biggest markets concerning tourism? Serrini continues: “The reasons are mainly structural and historical. There aren’t big hotel chains in Italy. The ownership is fractioned. Prestigious properties are often family-run, with issues connected to access to capitals and the hand over to the next generation. Hotels are generally small compared to the international standards. All these factors make hotels little appealing for the big hotel chains. How can they be used? “The situation might be very interesting for those players of the sector with a medium-long perspective, looking to create a quality hotel chain of medium-small dimensions, with experience in catering to an international clientele and very efficient from an operational point of view, from marketing to the booking process. These might be an innovative and smart solution, profitable for the players, and very promising for these assets which are one of the main resources of our countries”, Serrini concludes.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

The Italian real estate is recovering

10 October, Milano Finanza

The Italian market is improving. After a weak first semester, investments have recovered in the current one, reporting numbers aligned with those of the same period of 2017, a record year with investments for over 11 billion euro. According to the figures from the Bnp Paribas Real Estate Italia, the third quarter reported investments for 1.9 billion, with about fifty operations and a 10% growth from the previous quarter. Nevertheless, the total performance for 2018 reflects a slowdown of the prior year. In the first nine months, investments have set at 5.1 billion, 25% less compared to the same period of 2017, although the last quarter partly filled this gap.

There are many reasons for the slowdown: the physiological trend after a record year, the political uncertainty and the country risk, the shortage of core buildings (the favourite of international investors, the main buyers), the high prices (the returns for offices in Milan are currently at 3.3%). However, volumes are still high, definitely higher than those of the last few years on average.

The retail segment is performing well, absorbing 36% of the total investments (700 million in the current quarter and 2 billion since the beginning of the year) and reporting a 20% growth from 2017. Good results also from logistics: 450 million have been invested since the beginning of the year, especially in Milan and Rome, along with a good number of projects in the pipeline. Offices reported a decrease (-26% in the current quarter and -38% in the last nine months). Offices represented the main segment of Italian real estate, with investments for 530 million (1.7 billion since the beginning of the year). Such a reduction is mainly due to the shortage of quality buildings. Hotels have also reduced, with 500 million euro invested in the first nine months (-20%). Alternative assets (assisted living, student housing, data centers, barracks, cinemas) also reported investments for 500 million, confirming the great interest in these assets since 2014.

Milan is still the primary market with investments for 2 billion in the first nine months, while Rome slowed down (-10%), although it has recovered in the last quarter. “The market is still dynamic, but it suffers from the lack of significant operations that characterised 2017”, explains Cristiana Zanzottera, head of the research for Bnp Paribas Re Italia. “Nevertheless, it still attracts investments, especially from abroad, which have represented the main quota this year”.

Source: Milano Finanza

Translator: Cristina Ambrosi

NPL: Cerberus strategically interested in Italy (despite the spread)

28 September, Money.it

If the spread rises, the non-performing loans market will be impacted. Cerberus Capital Management is aware of this, although the interest in the Italian market remains.

Roberto Nicastro, senior advisor of the American fund, confirms this view, as he took part in the seventh editions of the NPL Meeting in Venice organised by Banca Ifis.

Cerberus doesn’t fear the political tensions that usually shake the markets, as it already proved in the past, in Spain during the Catalan crisis and in Great Britain after Brexit.

The impact of spread on NPLs

At the end of the event, Nicastro made some statements to the agency Reuters, stressing, in particular, the effects of spread on the bad loans market, on the demand as well as on the offer side.

“The increase of the spread doesn’t have a positive effect on the NPL market since banks are offering less as the capitals reduce. Meanwhile, investors are impacted by the increase of the cost of funding and equity”, he said.

For Cerberus senior advisor, Italy is still an interesting market at which the American fund look with great interest.

A strategic interest in Italy

Nicastro added that the American investment company wouldn’t be deterred from what is happening in the countries where it has operations planned.

“Cerberus is not that worried. The fund made investments in Spain during the Catalan crisis and in Great Britain after Brexit”, reminded the advisor.

The same will happen in Italy.

He added, “There is no impact in our strategic interest in Italy which is a country of stable volatility or of volatile stability”.

Spread and public finance

Nicastro continued, the spread trend also influences the payments by the public administrations. In fact, the increase if the gap between BTP and Bund creates “a general rigidity of public finance” which expresses in delays in the payments by public administrations.

In the first part of 2018, he reminds as an example, the public authorities took on average 105 days to pay their debts, more than the triple of Germany, where it takes 30 days, and the double of France and Spain, where 50-60 days are necessary.

Moreover, Cerberus has recently entered an agreement for the acquisition of 75% of Officine CST, the Rome-based company operating in the management of credits towards public administrations and unsecured credits.

The service provided by the platform, which-ich manages credits for over 16 billion euro and employs 150 people in Italy, are dedicated to banks, institutional investors, utilities and multinationals, as well as small and medium enterprises.

Source: Money.it

Translator: Cristina Ambrosi

New operation in the hotel market by Sorgente

28 September, Milano Finanza

Sorgente, the real estate company of the Mainetti family, is about to launch a new fund to invest in Italian hotels and to attract the main international investors. In the meanwhile, the company is also working at the first SICAF. Indeed, the Rome-based group is not lacking initiatives. In the last few days, Gualtiero Tamburini, Sorgente sgr, the asset management company of the group, has presented the projects. During the event in occasion of the Aspesi Foundation awards, the manager announced the upcoming start of an alternative real estate fund dedicated to recycling. “It will be a multi-segment real estate fund, specialised in plants for the treatment of special waste to produce alternative fuels and thermal energy”, said Tamburini. The objective is to gather 850 million and to invest the capital in the purchase of already existing and operational plants, for their potential extension, as well as in the implementation of new ones. According to Milano Finanza, there might be two other initiatives coming soon. At the end of 2017, Sorgente Group held total real estate assets for over 5.8 billion, including directly managed assets and those of its subsidiaries.

According to unofficial sources, thanks to his international acquaintances, Valter Mainetti is working at the launch of a new fund dedicated to Italian hospitality. The initiative allegedly got the attention of some foreign investors, and it has already identified its first target in an area in Sant’Elena, where the group plans to build a luxury hotel. Sorgente Group already has a fund dedicated to hotels, Giorgione 2, which was launched in June. In that case, the initial portfolio included two four-star hotels in Rome, and the fund, together with other banks, invested in impaired loans to turn them into profitable assets. This new fund instead aims at getting the attention of international investors in the Italian hospitality sector. The offers are not lacking, especially from Chinese investors looking to enter the Italian market. We will see how things will develop.

Meanwhile, the group has been working for a long time at another initiative which is now ready to be launched. It’s the first SICAF by Sorgente. The fixed real estate capital investment company (SICAF) is a new instrument introduced in 2014 which had spread quite slowly. As anticipated by Milano Finanza on 20th January, Sorgente planned the constitution of a Sicaf to transfer 26 properties for a total value of 242 million. Now everything is ready to start the paperwork necessary to launch the company.

Source: Milano Finanza

Translator: Cristina Ambrosi