Wednesday 20 September 2017

Blackstone pulls plug on Milan office tower bid

Blackstone's Stephen Schwarzman
Blackstone's Stephen Schwarzman

Sharon Smyth

Blackstone dropped out of the bidding to buy the former headquarters of Italian lender UniCredit in downtown Milan.

Blackstone, based in New York, and its local partner Kryalos decided against presenting a final bid for the office building after buying another property nearby instead.

The Italian division of Hines, with Arab and Asian funds, and Milan-based Prelios, with a London-based fund, are the remaining contenders in the bidding process, which ends February 9.

"The building could be an interesting opportunity for investors with a retail development plan," said Mario Breglia, chairman of Rome-based real estate research firm Scenari Immobiliari. "It's located in a square in the centre very well connected with the city's most famous shopping area."

Bids for the property in the Piazza Cordusio are expected to come in at about 300 million euros to €350m, the people said. Idea Fimit Sgr, the company managing the sale, was expecting about €400m.

UniCredit, which still rents the building, is trying to negotiate a plan to vacate the property, which it had initially intended to occupy for another 12 years, paying €20m a year. UniCredit has offered to pay a penalty, totalling less than €100m, to leave the offices within two years.

Spokesmen for UniCredit, Idea Fimit, Prelios and Blackstone declined to comment on the bidding. A spokesman for Hines also declined to comment.

In 2008, UniCredit transferred more than €1.2bn of property assets, including the headquarters, to a real estate fund managed by Idea Fimit. (Bloomberg)

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