Italian REITs may be new kids on the block, but they are already changing the perception of the real estate sector in Italy and attracting increasing levels of liquidity and investor interest, it emerged at the European Public Real Estate Association (EPRA) 2017 conference held in London this week.
The five listed REITs, which have a combined value of €3 bn, have delivered 9.1% annualised returns, exceeding the EU average, according to figures presented at the conference.
The EPRA event also provided another example of the progress that has been made.
Milan-listed Coima Res real investment trust (SIIQ) won two EPRA Gold Awards for its 2016 annual report and its 2016 sustainability report, the very first produced by the company, which only listed last year.
It is the first time that an Italian REIT has received international awards in its first year of operation. ‘We are pleased about the awards themselves, of course, but especially about the recognition of our commitment to excellence that they imply,’ said Manfredi Catella, founder and CEO of Coima Res. ‘There is no reason why Italian companies cannot be as transparent, as compliant and as well-regulated as other European companies, and we are determined to prove that by being the best.’
Improved size and liquidity
Such commitment is also a means to an end: making the Italian real estate market more institutional, more liquid and more international. ‘The ability of Italian companies to deliver best in class corporate governance, transparency and reporting standards is fundamental if we want to attract global investors and improve the size and liquidity of the market,’ Catella said.
‘Insurance capital and PIRs (individual savings plans) may soon boost the liquidity of Italian REITs,’ he said. The necessary legislative changes may come as soon as December. In the meantime, Italy is having a good year: investor sentiment is positive and political risk and banking issues are less of a worry.
Growing international interest
Around 70% of the €19 bn inflows into the Italian real estate market over the last two years have come from international investors, and their interest is growing.
‘For our latest fund, Italy’s first and biggest development fund, we have noticed an unprecedented level of interest from institutional investors in Asia, the Middle East, America and Europe,’ Catella said. ‘These are serious, reputable investors and they believe in the long-term future of the sector in Italy.’
Coima Sgr, a fund manager of which Catella is also CEO, has been looking abroad to place the Coima Opportunity Fund II, a €500 mln cross-sector fund that will focus on development and regeneration projects in the Milan area.
The first closing of the fund was finalised late last year with a €150 mln commitment from a major sovereign wealth fund. The fund’s overall investment capacity, including leverage, will be over €1 bn, and its net return target is set at 10-12 %.
