Pro-forma for the Eurcenter disposal, COIMA RES exposure to Milan increases to 90% (from 80%), thus allowing the company to further benefit from the valuation transparency of the Milan office market, which is the largest and most liquid segment in Italian real estate accounting for more than 60% of the Italian office market both in terms of number of transactions and investment volumes in the last four years. Concentrating in Milan protects COIMA RES and its shareholders vs macro risk and the volatility currently affecting Italy. The Milan office market is characterised by scarcity of Grade A assets, which represent only 10% of total office stock, which are the properties where tenant demand is strongest. The supply-demand un-balance in Milan remains favourable to landlords and the rental growth outlook remains positive, in particular in Milan Porta Nuova where 34% of COIMA RES’ portfolio is located. Post Eurcenter sale, 44% of COIMA RES’ portfolio is geared towards growth (from 40% previously), in terms of potential to capture rental growth and capital appreciation also through asset repositioning processes.
Pro-forma for the Eurcenter disposal, COIMA RES’ LTV decreases to 35% (from 43%), de-risking COIMA RES’ financial profile and further insulating from macro risk.
COIMA RES will use the proceeds from the Eurcenter sale to maintain, at this particular point in time, an LTV below 40% whilst continuing to evaluate investment opportunities in the Milan office market.
The Eurcenter sale was performed through the COIMA Core Fund VI (previously known as MH Real Estate Crescita, i.e. MHREC), which is 86.7% owned, and fully consolidated, by COIMA RES.
Manfredi Catella, Founder and CEO of COIMA RES, commented: “COIMA RES closes the year 2018 completing its first round of investments since IPO with the acquisition of the Pavilion from UniCredit and achieving its first roundtrip performance with the sale of the Eurcenter asset in Rome at a 13% premium and delivering a 20% IRR. These achievements allow us to crystallise performance and highlight the significant embedded value of the company which is characterised by a Milan focussed defensive portfolio with solid growth prospects.”