Pirelli & C. Real Estate take a 20% stake in Marzotto Group

Dec 23 2002
Price sensitive
The Pirelli & C. Real Estate Group today reached an agreement for the acquisition, by the end of the year, of a 20% stake in the vehicle company that has taken on the property development areas disposed of by the Marzotto Group, areas with an estimated value of approximately 64 million Euro.

At the same time, a framework agreement was signed for the concentration within this vehicle, by the end of March 2003, of development areas drawn from the asset portfolios of the Pirelli & C. Real Estate, Olivetti e Telecom Italia Groups. The overall value of the assets transferred to the vehicle company will be in the order of 200 million Euro. These assets are former industrial sites located throughout Italy, which have an overall surface area of more than 3.6 million square metres and will provide more than 3 million cubic metres of construction space. Pirelli & C. Real Estate will be granted the mandates for asset management and specialist services (obtaining building concessions, agency and administrative services) for the integrated management and exploitation of the areas concerned.

For the industrial partners involved, this represents a major step towards the rationalisation of their real estate businesses. The transfer of these areas to a dedicated company will allow for a more tailored and effective exploitation of the assets, as well as their subsequent sale.

For Pirelli & C. Real Estate this initiative ensures a major presence in the strategically important market of land asset management. In line with the business model developed by the Company, a fundamental prerequisite of this sector of activity is the ability to identify development planning solutions that meet market needs, both in terms of the mix of real estate products and the period of market absorption.

The respective stakes in the overall asset portfolio will be proportional to the values of the respective areas contributed, subject to completion of the due diligence currently underway, and will be broken down as follows (approx.): 34% to Pirelli & C. Real Estate, 33% to Marzotto, 29% to the Telecom Italia Group and the remaining 4% to the Olivetti Group. Once fully operational, participation by an institutional investor is foreseen.

The vehicle will be 40% equity financed and the balance of 60% will be raised through non recourse bank financing.

The advisor for the operation is Lazard & C.