Coima and UBI’s €1bn Milan offices deal explained

An elaborate swap-style deal between the bank and manager accounts for two-thirds of office transaction volume in the Italian city year-to-date.

It would be hard to find a deal between two parties with more layers than Italian bank UBI Banca and manager Coima’s €1 billion swap-like transaction for Milan offices, signed last month.

Essentially, the deal sees the bank buy the Gioia 22 office tower development from a fund managed by Coima on behalf of sovereign wealth fund Abu Dhabi Investment Authority for €500 million. Simultaneously, and for the same amount, UBI Banca has sold a portfolio of seven offices, also in Milan, to vehicles managed by Coima.

Gioia22 COIMA

The concurrent deals will lead to the bank relocating from the seven offices to Gioia 22. For its part, Gioia has signed a 15-year lease for approximately 75 percent of the office’s 400,000 square feet over 26 floors when completed in 18 months’ time.

Beyond the multi-layered nature of this collaboration between counter-parties, the deal has further relevance for the Milan market. The aggregated €1 billion value of the two investments accounts for almost two-thirds of the total €1.7 billion of office transactions in Milan year-to-date, according to data by Real Capital Analytics.

UBI Banca’s purchase of Gioia 22 was completed by acquiring the shares of a special purpose fund managed by Coima, called the Porta Nuova Gioia fund, from ADIA.

In an agreed third transaction, when the development of Gioia 22 completes and UBI Banca has taken occupation, Coima has agreed to acquire back a stake of between 10 and 25 percent of the fund for its listed entity Coima RES.

“UBI Banca fundamentally wanted to own the asset and it’s an efficient way of acquiring the building,” Manfredi Catella, founder and CEO of Coima SGR, told PERE. “They’re leasing it because they want to have co-investors, which is Coima RES. For Coima RES, it’s the perfect exposure because it’s a great asset, it’s very well-located, and it has a high-quality cashflow.”

UBI Banca will be vacating seven Milan offices, which it had sold to Coima for €500 million. The bank will continue to occupy these until its relocation to Gioia 22, after which time the offices will be redeveloped.

UBI’s relocation to a newer, more sustainable building in Milan’s Porta Nuova district is a trend that has been seen in Italy’s core office market within the last decade, Catella said. “Since 2010, a number of corporates have started to relocate out of old buildings into more modern, efficient buildings that have capacity for all their employees and are more sustainable in terms of energy consumption.”