23 February 2024 17:41
Price Sensitive

IGD signs an agreement with Sixth Street and Starwood Capital for the sale of a real estate portfolio

  • The portfolio comprises 13 assets (11 hyper/supermarkets and 2 shopping malls) valued at €258 million, substantially in line with the appraisals as of 31 December 2023
  • The transaction will be carried out through the creation of a closed-end real estate investment fund called “Food Fund” established and managed by Prelios SGR into which the real estate portfolio will be contributed
  • Impact on IGD: cash in of roughly €155 million to be used to repay existing debt, resulting in a reduction in leverage ( a decrease of around 3.7 p.p in the LTV is expected)

 

Bologna, 23 February  2024 – IGD SIIQ S.p.A (“IGD”) announces the signing of an agreement with Sixth Street, a global investment firm with approximately $75 billion in assets under management (“Sixth Street”), and controlled affiliates of Starwood Capital (“Starwood”), a private investment firm with $115 billion of assets under management, and Prelios SGR S.p.A., a leading Asset Management Company in Italy, for the sale of a portfolio of 13 assets for €258 million, consistent with the book value as of 31 December 2023. The transaction is expected to close by April 2024.

The portfolio comprises 8 hypermarkets (located in Chioggia, Porto d’Ascoli, Roma, Rimini, Conegliano, Ascoli Piceno and 2 in Bologna), 3 supermarkets (located in Civita Castellana, Ravenna and Rome) and 2 shopping malls (located in Bologna and Chioggia), which generate net rental income of approximately €17 million per year.

The transaction will be carried out through the creation of a closed-end real estate investment fund called “Food Fund” established and managed by Prelios SGR, the asset manager of Prelios Group with approximately €8 billion assets under management, into which IGD will contribute the properties. 60% of the fund units (class A shares with preferred return) will be held by a Luxembourg vehicle (held 50% by Sixth Street and 50% by Starwood Capital), while the remaining 40% (class B shares with subordinated return) will be held by IGD.

Net of the amount invested in the fund, IGD will receive roughly €155 million for the sale of the units at the time of the closing. Toward this end, the closing of the transaction is not subject to financing nor to any other conditions precedent.

IGD will also sign a contract with the SGR to continue to manage the project, property & facility management activities across the entire portfolio; the goal is to further enhance the portfolio over the next few years and sell it to the market at the best conditions possible.

The disposal of the portfolio was included in the Business Plan 2022-2024 and it is entirely aimed at reducing the Group’s financial leverage. As a result of the transaction, the current Loan to Value (pro-forma) as of today is expected to decrease by c. 3.7 percentage points. With the proceeds of the transaction, IGD will partially early repay the mortgaged-backed loans on the properties sold, as well as some further loans, in compliance with the relevant contractual agreements, among which the “€310,006,000 Fixed Rate Step-up Notes due 17 May 2027” bond. This will lead to a decrease in financial charges of approximately €11 million per year. Lower operating costs and higher revenue from project, property & facility management will also have a positive impact on the income statement of some €2 million per year.

 

“With this transaction we are completing the implementation of the asset disposal strategy outlined in the 2022-2024 Business Plan. This disposal represents a significant milestone because, along with the one completed at the end of 2021, it brings the total resources raised over the last 3 years to reduce the Group’s indebtedness to approximately €270 million. In this way, the Loan to Value is expected to decrease by c. 3.7 percentage points”, the IGD’s Chief Executive Officer Claudio Albertini said.