Pirelli & C. Real Estate launched Cloe, an € 873m. Italian closed-end office fund. The equity in the non-listed fund was placed to qualified institutional and private investors. Deutsche Bank acted as one of the private placement co-coordinators.
The Cloe funds consists of predominantly 38 office assets with 370,000 m² of renatble space. Of the portfolio, 71% is located in Roma and Milano, and 29% in Bologna, Napoli, Torino, Genoa and other cities. 51% is based on triple-net (residual) 17-year (plus 6-year renewal options) with Telecom Italia, a BBB+ credit-rated tenant, while remaining 49% is based on standard office leases with a variety of government , corporates and financial institutions. The 60%-levered fund is anticipated to yield and 8% annual return and a 12.5% IRR.
This transaction is indicative of a trend in which long-term leased corporate real estate assets find their way to the investment markets, this allowing non-real estate companies to reinvest tied-up cash into their core business while enabling to benefit from the return potential from long-term credit tenants.
