Italian fund makes £167m debut in London

The chief executive of the Sorgente Group says he wants the London property market to ‘sit up and take notice’ of its arrival as the Rome-based asset manager acquires Queensberry House on behalf of its semi-closed ended, Donatello Fund.

A new fund entrant to UK real estate has arrived in the shape of Italy’s Sorgente Group. The Rome-based firm said it has completed a £167 (€207 million; $260 million) deal to buy Queensberry House from Aviva Investors in London.

Sorgente said this morning the London investment was made for its Donatello Fund which is a semi-closed real estate umbrella fund that has a number of sub-funds with different life spans and strategies. The David Sub-fund acquired the 22,000 square metre Queensberry House and has a duration of 25 years, with an investment policy targeting mainly non residential buildings, explained Sorgente. Sorgente said in a statement that the maiden deal was the start of a “strategic move” to acquire commercial properties in the UK.

Valter Mainetti, chief executive of the firm, said:  “We want the London property market to sit up and take notice of our arrival. We are absolutely committed to building a long-term presence in the UK drawing upon our decades of experience in managing properties at every stage of the macro-economic cycle.”

Queensberry House was built in 1990, and had produced an average annual rental yield of 5 percent and was currently fully leased. Sorgente said the London commercial market was characterised by tight supply in prime locations and that Queensberry House satisfied its preference for investing in “iconic buildings” across the globe offering stable and long-lasting rental returns. The group’s portfolio also includes ‘Flatiron Building’ in Manhattan and the Galleria Colonna, recently renamed Galleria Alberto Sordi, in Rome. The group previously owned the iconic Chrysler Building art deco skyscraper in New York as well.

Giovanni Maria Benucci, managing director of Sorgente SGR, the asset management company which manages the Donatello Fund, said: “The acquisition of Queensberry House marks just the start of Sorgente Group’s move to become an active investor in the UK commercial property market. Office demand in London remains high and we believe this situation will continue to improve in the years to come as private sector business activity in particular is rejuvenated in the UK.”

He added: “Queensberry House gives use an important foothold in the UK as we pursue a strategic programme of international expansion which has already seen us manage assets over many years in the United States and Italy. This property enables us also to remain true to our guiding principle of investing in iconic buildings which offer sustainable rental returns to our funds.”

The company added in its statement today how it was moving fast to also attract investment from UK-based institutions into its range of real estate funds.  It has launched a new company, Sorgente UK, to market and distribute its six products. The new UK company will not be acquiring property on behalf of the real estate funds, but is rather a fund raising vehicle, it highlighted.

In addition to Italy, the UK and Luxembourg, Sorgente Group is also active in the US and Switzerland. The group has assets of €4 billion ($5.1 billion) and is now planning a programme of fundraising to expand this total of assets under management to $10.3 billion by 2015.

The company established a fund management business in 1999 but its origins actually date back to 1919 when it began activities in the US via the creation of multi-storey steel structures and major construction projects including the Chrysler Building, the New York Stock Exchange and the American-Standard Building.

The sprawling group operates in the real estate finance too sector with five investment management companies in Italy, Switzerland, Luxembourg and the US, and 41 real estate companies and financial and real estate service companies l in Italy, France, UK, Luxembourg and US. Total equity managed in its funds has reaches $4.6 billion, of which $1.7 billion is already subscribed and paid up.

The Sorgente Group began operations in the real estate fund sector in Italy with the establishment of Sorgente SGR in 1999, one year after the introduction of legislation that consolidated the sector. In the early years, between 2000 and 2006, Sorgente SGR then launched three Italian real estate funds. The group's international focus was consolidated in 2007 with the establishment of a investment management company in Luxembourg. Over the last three years it added an additional nine Italian registered real estate funds as well as 2 registered in Luxembourg.

In 2010 the Italian registered Michelangelo Fund was liquidated at maturity with an internal rate of return of 8.5 percent.