Manfredi Catella
COIMA RES

COIMA RES founder and CEO, Manfredi Catella, talks about what the Italian REIT has achieved so far, the challenges facing the market and where opportunities are hidden in the limited real estate sector

COIMA RES received two Gold Awards by the European Public Real Estate Association (EPRA) for its 2016 Annual Report and its 2016 Sustainability Report, what platform does this give you?

The EPRA assigned COIMA RES two gold awards to both its annual report and its sustainability report. We have recently joined the public market and the more we succeed and position ourselves as a highly-credible and highly-professional company, the faster we will be appreciated by investors.

Our shareholder structure is highly diversified from a geographical point of view, encompassing both generalists and real estate specialists. There are also quite a few investors who are not yet shareholders, but that are monitoring our progress and evaluating a potential investment in COIMA RES.

You achieved positive results in H1 of this year, what are your goals for the rest of the year?

Since our initial public offering in May last year, we have built ahead of our original forecast a core office portfolio, which has mainly focused on Milan, allowing us to produce cash flow and pay dividends. As far as future investments are concerned, we have firepower for about €100 million and we plan to deploy it to further increase our activities in Milan. We are also very active in managing our portfolio and extracting value from our properties by leveraging on our deep technical and commercial expertise in real estate. We also aim to actively rotate our portfolio to crystalise the value generated. We could see a very active six months ahead of us.

Where do you see the best opportunities in the Italian market at the moment?

As far as COIMA RES is concerned, we are focusing on Milan, with it being the most liquid and most institutionalised market in Italy, and we are focusing on core plus investment opportunities in the office segment.

In wider terms, both in Milan and in other cities in Italy, there is a real gap in the real estate product. This is a constant theme, which is valid in several asset classes being offices, residential, student housing, logistics, hospitality and so on. These are all sectors that are experiencing some degree of innovation but offer is still scarce. The price differential between grade-A and grade-B offices, for example, is quite meaningful and this is driving change, especially in Milan.

What regulation changes do you expect in the Italian market?

The most significant change could be related to the liquidity available to invest in the real estate sector, in particular on the listed side, for example REITs.

In the 2016 Budget Law, the Italian government created tax-exempt investment schemes called Piani Individuali di Risparmio, which are similar to the individual savings accounts in the UK and the Plan d’Épargne d’entreprise Actionnaire in France. The purpose of these instruments is to favour Italian retail savings flowing into small and medium-sized businesses and to help financing the growth of the Italian economy. When the government designed and approved this law, real estate was excluded. These investment schemes have already raised €5 billion in H1 2017 and portfolio managers would like to have more stocks to invest in it. So, one of the changes the Italian Ministry of Economy and Finance is evaluating is to make REITs eligible for these investment schemes. This change could generate a very meaningful capital inflow into the listed real estate sector in Italy.

Do you see the Milan market competing with London, Berlin and Frankfurt?

I think we can compete quite well with other European cities. This process has already started. The government has approved an attractive tax incentive for high-net worth individuals wanting to take residence in Italy and for professionals that would like to move to live and work in Italy after having lived abroad for a prolonged period. This is a positive measure to help Italian demographics. The mayor of Milan is also doing a great job at presenting the city to attract talent and foreign investors. The real estate sector is already improving and aligning itself to international standards also helped by the fact that we are experiencing strong rental growth in Milan for high quality buildings which are scarce but that are high in demand from tenants

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