Eurocastle looks impregnable in joint Italian fund bid

Fortress-managed Eurocastle and European investment group GWM are seeking to buy into an anticipated Italian property recovery via an offer for part of a €500m listed Italian fund. On 7 January GWM and Eurocastle announced an offer for 40% of the units in UniCredito Immobiliare Uno, a closed-ended fund launched in 1999 by Italy’s UniCredit Bank.

Their €1,850 per unit voluntary tender offer price was a 13% premium to the weighted average market price in the past three months, but a near 40% discount to the fund’s net asset value (at 30 June 2013). The large discount to NAV is partly due to the fund’s illiquidity – it is listed in Italy but there is no match trading – and the time it could take to sell assets.

Torre, which now manages the fund, is majority owned by Fortress, making it less likely that a rival offer will be launched. It is owned mainly by retail investors. Torre has agreed to extend the fund from 2014 to 2017 so the 14 largely ungeared properties can be sold in an orderly fashion.

Their assets include the offices of newspaper Il Sole 24 Ore and Pirelli’s HQ in Milan and a portfolio of supermarkets. Last summer GWM beat pan-European investors including Rockspring and Orion to buy Rome’s largest retail park, Da Vinci, at a 9%-plus yield, with debt from Natixis and ING.