Union Investment has entered the Italian office property market with the purchase of a redevelopment project in Milan. The Hamburg-based real estate investment manager has secured the Piazza San Fedele 1–3 office building in Milan’s historic business district. The property is centrally located, close to Milan Cathedral and La Scala opera house and directly adjacent to the Galleria Vittorio Emanuele II shopping arcade. The historic building dating from 1872 was originally used as a theatre and re-built as headquarter of a bank following its destruction during Second World War. It is currently being comprehensively refurbished and modernised by the vendor, COIMA. The refurbishment works are set to be completed in the fourth quarter of 2023, when the building will be handed over to its new tenant. Bottega Veneta, a brand of luxury goods company Kering and one of the most famous names in high-end fashion will set up its global headquarters in the building and will occupy the entire rental space of around 10,000 square metres across nine floors. Bottega Veneta has committed to a 12 year lease, thus delivering long-term rental income for open-ended real estate fund Unilmmo: Deutschland.
Union Investment is acquiring the project from a real estate fund managed by Italian investor and developer COIMA in an off-market transaction. COIMA will continue to manage the investment for Union Investment through a new fund vehicle following completion. The purchase price was not disclosed.
“As Italy’s main commercial centre and one of the world’s leading fashion and design capitals, Milan offers excellent conditions for investments in the office sector. With its prestigious location in the historic city centre, high sustainability standards and long-term lease to Bottega Veneta, Piazza San Fedele 1–3 is the perfect first investment for our anticyclical entry into the Milan office market,” said Martin Schellein, Head of Investment Management Europe at Union Investment. “We look forward to continuing our cooperation with COIMA, who will manage the Italian fund vehicle set up for this purpose on our behalf.”
The acquisition of its first office property in Italy contributes to the international diversification of the UniImmo: Deutschland fund’s real estate portfolio. This grade A investment also reinforces the sustainability profile of the fund: Piazza San Fedele 1–3 will achieve an EPC rating of A, thus meeting the EU Taxonomy criteria. The aim is to obtain at least LEED Gold certification.
Union Investment was advised on the deal by DILS, DLA Piper, McDermott and Aecom, while COIMA was advised by Shearman & Sterling and Maisto & Associati.
