Hines and PGGM shop for prime Milan retail asset

The Milan value-add joint venture between international real estate firm Hines and Dutch pension fund manager PGGM has acquired a prime retail asset in Milan from a fund managed by Invesco and Thor Equities.

The deal, for an undisclosed sum, was executed via a real estate fund managed by Savills Investment Management.

Via della Spiga 26, previously occupied by luxury brand Dolce & Gabbana, comprises 12,000 m2, and will now be transformed into a new luxury retail and office mixed-use building through a comprehensive refurbishment, Hines said.

'Hines and PGGM have a long-standing relationship, having been developing real estate together since the 1980s. PGGM is a trusted, highly respected partner and we are pleased to be extending our relationship through this deal,' commented Lars Huber, CEO of Hines Europe.

The building is positioned in the city's Quadrilatero della Moda, a district also undergoing a broader revitalisation programme. The asset can be accessed directly from Via della Spiga as well as from Via Senato 19.

Hines and PGGM entered into a joint venture in 2017 to target high-street retail, office and mixed-use value add opportunities in Milan. The parties previously invested in a portfolio of three office buildings in late 2017.

'Milan has become part of our city focused investment programme because it offers great investment opportunities, both for achieving attractive financial returns and for improving the sustainability performance of well-located assets,' said Tinka Kleine, senior director private real estate for PGGM.

'Hines’ expertise in executing this strategy is key for our successful partnership and we look forward to creating a great new destination in Via della Spiga,' Kleine added.

Value-add proposal
According to Invesco and Thor Equities, the fund which disposed of the asset acquired the building a few years ago, and together with architects SPI developed a programme of refurbishment to expand and modernize the site. Multiple design options including retail, hotel, office and residential use were conceived.

'We knew this was a rare asset when we first acquired it, and were confident that together with Thor we would be able to turn it into something really special,' said Bert Crouch, managing director, structured investments, Invesco Real Estate.

'But we’ve been really pleased with the level of additional value already generated, and this has enabled us to complete this significant deal earlier than originally planned,' Crouch added.

The joint venture between Hines and PGGM was advised by Legance on legal & financing aspects, by DLA Piper on regulatory aspects, and by PwC in relation to tax.

Avalon acted as technical advisors while Ammlex acted as administrative and town-planning consultants. BNP Paribas is providing project financing for the investment.

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