Beni Stabili and Lehman Brothers take stakes in IM.SER, in Europe’s second-largest property deal
In Europe’s second biggest-ever real estate deal, Beni Stabili, Lehman Brothers and Telecom Italia have joined forces in a landmark transaction to manage and enhance part of the Italian telecommunication company’s property assets.
Under the agreement Beni Stabili, now the biggest property company in Italy, and Lehman Brothers take a 60% stake in IM.SER, a company spun off from Telecom Italia in November last year, and owner of some of the most valuable properties of the group. The deal values IM.SER at €2.9bn (L5.6tr).
Under the new shareholder structure quoted company Beni Stabili owns 45%, Lehman Brothers holds 15%, and Telecom Italia retains a 40% interest in IM.SER.
The deal enables Telecom Italia to reduce its debt by €2.69bn (L5.2tr). At the same time the telecom company will pocket a capital gain after tax of €387m (L749bn).
Under the agreement Beni Stabili, which was created when SanPaolo-IMI spun off its property portfolio, will act as strategic partner for the property management.
Unique features
“The transaction has some unique features enabling us to acquire a high-quality real estate portfolio,” said Dario Valentino, head of corporate development at Beni Stabili. The company will fund its participation of €258m (L500bn) by using leverage of up to 50% and from internal funding sources.
IM.SER owns a real estate portfolio comprising 581 properties with a total space of 3.7m m2. The properties, which are located throughout Italy, will be divided into two asset pools. One portfolio will include 195 properties totalling 1.3m m2 which are let to Telecom Italia on standard contracts such as 6 plus 6 years at market rates.
A total of 48 properties are vacant. These assets will be transferred into a separate company and are expected to be sold within the next five years. The funds will be used to reduce debt.
The other 386 properties totalling 2.4m m2 are let to Telecom Italia on a long-term lease (21 years) at market rates. Lehman Brothers has an option to sell its stake and Beni Stabili has an option to buy. It is expected IM.SER will be fully consolidated into Beni Stabili within two years through a merger.
This would be achieved by Beni Stabili issuing shares to Telecom Italia. It would also be subject to Beni Stabili shareholders’ approval. Valentino expects parts of the portfolio to be sold off later.
It is thought likely that Lehman Brothers will come up with a formula for refinancing debt through a securitisation.
Important step
The transaction, which is also the third largest worldwide, marks an important step in the development of Beni Stabili. Dario Fumagalli, property equities analyst at Deutsche Bank said of the company’s share price: “We see an upside potential of at least 20%, targeting the share price at 0.64 cents.”
Since its birth last year Beni Stabili has been successfully concentrating on diversifying its portfolio – worth around €700 (L1.3tr) prior to the Telecom Italia deal. It has also set up joint ventures with Italian construction company Bonaparte and one with French resort developer and operator Pierre & Vacances.
