Corporate and Government Sale Leasebacks Deals Surging in Europe

A special Property Report in the January 11, 2006 issue of The Wall Street Journal Europe reports that a number of sizable corporate and government property portfolios are up for grabs, particularly in Italy, Belgium and France.

Leading the way is Comit, the former pension fund of Banca Commerciale Italiana, which is part of Italian bank Intesa Group. First-round bids for a portfolio of Comit's real-estate assets are due by the end of this month. The portfolio is expected to include trophy offices in Milan, bank branches it will lease back, and a residential component. The portfolio is expected to fetch a price in the region of 700 million euros [$846 million]

Italy's government is disposing of real-estate assets to narrow its budget deficit. In December, the government set up a real-estate fund, Patrimonio 1, into which it has put real-estate assets such as a police barracks, with an estimated value of 800 million euros. The move is part of Italy's strategy announced in September to sell 3 billion euros of real estate by the end of 2007. Last month, the disposal program began, with the government selling a portfolio largely comprising offices in Rome and Milan, to Fintecna SpA -- a company controlled by the Ministry of Finance, and which has a role in managing real-estate assets -- for around 400 million euros. Another 600 million euros of real-estate is expected to be sold to Fintecna, probably this year, with another 1.5 billion euros of assets being sold to Patrimonio 1 or a new public fund of a similar nature to Patrimonio.

Italian corporations are getting in on the act. Telecom Italia SpA agreed last month to sell 900 properties, mainly offices, to a joint venture between Morgan Stanley Real Estate Funds, part of U.S. investment bank Morgan Stanley, and Pirelli Real Estate for 790 million euros. The deal is expected to close by June. Pirelli Real Estate is 51%-owned by Italian tire maker and broadband-solutions developer Pirelli & C. SpA.

Belgium saw a slew of real-estate sales last month, with state entities selling 20 properties, with an estimated value of 250 million euros, according to Maxime Xantippe, a partner at advisory firm CB Richard Ellis in Brussels. Belgium's federal government sold a 47,000-square-meter office in Brussels's city center for 37 million euros to real-estate company Cie. Immobiliere de Belgique SA.

Also in December, the Belgian government sold the 72,000-square-meter Court of Justice in Antwerp to Belgian-listed real-estate company Cofinimmo SA for a sum that wasn't disclosed. Real-estate experts say it is likely to have sold for around 180 million euros. Belgium will lease the court back from Cofinimmo for 36 years, with an option to continue leasing.

In France last year, the government fell short of its target of selling as much as 850 million euros of real-estate assets, disposing of just 600 million euros. This year, the government intends to dispose of another 600 million euros in real-estate assets. Sphere: Related Content