Pirelli and partners still in talks over €4.5bn portfolio

Pirelli RE of Italy revealed in its annual results that it is still discussing with German retail group Arcandor the purchase of a 49 percent stake in a retail property joint venture held with Goldman Sachs.

Italian firm Pirelli RE is pressing on with discussions with Germany retail Arcandor over the purchase of a 49 percent stake in a €4.5 billion property joint venture.

The real estate investment company revealed the status of the negotiations in its annual results. It comes after conflicting statements regarding the deal were aired in public almost three months ago.

Pirelli RE, which manages a number of real estate funds and partnerships, said in a statement: “Pirelli RE together with a number of partners are continuing their negotiations with KarstadtQuelle AG (Arcandor Group) to buy 49 percent of the joint venture owning the real estate portfolio let to Karstadt, Germany's top player in the business of large warehouses and one of the biggest in Europe.”

Problems arose after Arcandor said it had signed a letter of intent to sell its stake in the real estate joint venture with Whitehall Fund to a consortium comprising Pirelli Real Estate, RREEF and Italy’s Borletti family, and then went on to reveal a share swap deal leading to the creation of a luxury retail group. That statement prompted a rebuttal from Pirelli.

Under the plan, Arcandor said its Karstadt business would acquire a 25 percent stake in La Rinascente and Printemps, while the real estate consortium would take a 25 percent stake in Karstadt’s new Premium Group, owned by Arcandor. La Rinascente is owned 46 percent by Italian private equity firm Investitori Associati, while RREEF owns 30 percent, Pirelli 20 percent and the Borletti Group 4 percent. Pinault-Printemps-Redoute, now renamed PPR, is owned by RREEF and Borletti having completed a two-stage acquisition in 2006 and this year.

However, Pirelli issued a statement insisting no letter of intent had been signed to that effect.

As well as insisting talks were ongoing, Pirelli revealed it grew assets under management in 2007 by 3 percent to €15 billion, comprising €12.6 billion of real estate and €2.4 billion of non performing loans.