Cheyne backs Bain’s Italian residential projects with €250m loan

The lender, which is financing two developments in Milan, sees strong demand for build-to-sell housing in the country.

London-based alternative lender Cheyne Capital has provided a €250 million senior loan to a partnership between US investment management firm Bain Capital and Italian contractor Borio Mangiarotti to finance two residential projects in Milan.

The partnership will use the loan to fund the development of around 170 new homes in the Lambrate district of the city, and around 600 new homes in the former Trotto area.

Speaking to Real Estate Capital Europe, Daniel Schuldes, co-head of Europe at Cheyne, said the loan is the sixth the lender has completed with Bain. He said Cheyne has observed strong demand for build-to-sell housing in Italy, particularly in the major cities.

“Despite [the] increasing cost of financing, volumes of sales in good products are still good. The pre-marketing phase on Lambrate has also been strong,” he said.

This year, market participants have told Real Estate Capital Europe the increasing cost of mortgages, due to rising interest rates, has prompted some developers to shift towards a build-to-rent model.

However, last year, the residential market as a whole in Italy saw the highest amount of investment compared with the previous five years, according to real estate consultant CBRE’s 2023 Italy Real Estate Market Outlook. The asset class exceeded €820 million in investment, with 86 percent by foreign investors. The adviser also highlighted a steady increase in rents and house prices.

The partnership between Bain and Borio Mangiarotti has acquired 1.08 million square feet of land from Italian investment management firm Prelios. Previously, it purchased 172,000 square feet of land from Sammontana, an Italian frozen dessert specialist, in the Lambrate district. The two firms plans to develop the land into build-to-sell residential schemes, with a targeted energy rating of ‘A’.

The Trotto residential complex will be part of an urban regeneration scheme called EXTM, which is planned by Houston-based real estate giant Hines. The manager will also develop a further 700 rent-capped furnished homes, green spaces and public amenities.

“We estimate Milan will add nearly 30,000 more households by 2030, accelerating the current supply and demand imbalance in the residential market,” said Rafael Coste Campos, European head of real estate at Bain Capital Special Situations. “With this project, we will help provide high-quality, modern and energy efficient residential units critically important to the local community,” he added.