MILAN — Prelios SGR said Thursday that its Retail & Entertainment fund has sold the building fully leased to La Rinascente, located in Milan’s Piazza Duomo opposite the city’s imposing cathedral and at the heart of Milan’s shopping streets and tourist attractions.
The property, the Italian department store’s jewel in the crown, was sold for 472 million euros, or $668.2 million at current exchange, to real estate investment fund Fondo Ippocrate-First Atlantic SGR SpA. The deal generated a gross capital gain of about 108.5 million euros, or $153.6 million, compared with the book value as of Dec. 31. The property complex comprises two interconnected units covering a total of 567,907 square feet, and a sales surface of 252,925 square feet.
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“The sale does not have any effect on us,” Maurizio Borletti, chairman of La Rinascente and one of the owners of the historic department store chain, told WWD. “Personally, I see this in a positive way, given that [doctors and dental surgeons pension corporation] Enpam [which invests in Ippocrate and First Atlantic] has long-term objectives and is not a competitor of La Rinascente, so it is a very desirable landlord. I believe that for such a pension fund, this is a wise investment, and satisfying for both sides.”
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Borletti said that First Atlantic initially joined forces with Central Retail Corporation, a giant retail conglomerate from Thailand, setting as a condition for the acquisition of the building that Rinascente would also be sold to CRC, “but this fell through.”
In February, Borletti turned to Italian law to contest the procedure of the sale of La Rinascente, as CRC had expressed an interest in the acquisition of the store. Borletti said he “was not given the opportunity to conduct due diligence and was negated access to La Rinascente’s data room” by other shareholders of La Rinascente, which include Italian private equity fund Investitori Associati, Prelios (formerly Pirelli Re) and Deutsche Bank. Borletti won the first round and was granted access to the documents earlier this month, and is now conducting due diligence with an eye toward putting a deal together to buy out some of the other shareholders.
Borletti and the other shareholders took control of the store chain five years ago and moved La Rinascente upmarket, planning the renovation of several stores and adding luxury brands like Gucci, Louis Vuitton and Salvatore Ferragamo. Vittorio Radice was tapped as chief executive officer of the group to revamp the stores.
“We have developed the company well, and some partners want to exit the project, which is not surprising, given that five years is the typical timing for funds to monetize their investments,” said Borletti. “I, as a private shareholder, am not moved by time issues, and I didn’t see the opportunity to leave. I think there is still a lot to do, and it’s not the right moment. Even before the arrival of Central Retail, I had told my partners that I wanted to buy their shares.”
In the meantime, Borletti said several luxury brands came forward to back the entrepreneur’s offer, concerned with the mass market image of Central Retail. Borletti said he was bound by confidentiality agreements and declined to disclose the name of his potential supporters, nor would he divulge the value of La Rinascente, which includes both the company and its real estate, such as the prestigious flagship in Milan’s Piazza Duomo. Sources, however, estimate the price tag, excluding the real estate properties, could reach 200 million euros, or $270.9 million at current exchange.