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Spazio unloads just half of assets in €140m sale

The European industry property company says the general freeze in real estate transactions has prevented it from selling as much of its Italian portfolio as it had hoped. By year end, Spazio says it expects to have sold just €70m, half its original target.

Spazio Investment, Europe’s second largest industrial property company, says it has only sold half the assets it had hoped to as it seeks to restructure its balance sheet.

Spazio, which owns around €730 million of property in Italy and whose shareholders include Pirelli Real Estate and activist investor Laxey Partners, said in September it would sell €140 million of assets by the end of the year, with a total of €450 million of dispositions over the next three years.

However, in a statement, the industrial property company said as of the end of June, it had sold just €56.9 million of assets, with expectations that €70 million would be sold by the end of 2008.

The firm said it was confident it could meet its €450 million target by 2011, saying there was a “good level of interest” in its portfolio from local investors. It added purchasers were eyeing €100 million of assets for potential sale during the second half of 2008.

Spazio has already frozen acquisitions and cancelled deals where it had a first right of refusal. As part of its restructuring plans, it has also altered the fee arrangement of its external manager, Pirelli Real Estate, to compensate Pirelli according to the euros per share distributed in cash to shareholders.

Pirelli is the second biggest individual shareholder in Spazio, which along with private equity real estate firm Cyprus Grove, took Spazio public. The largest individual shareholder with 20.5 percent is London-based Laxey Partners, an activist fund that has been at the forefront of calls for a shake-up. Other significant shareholders include hedge funds GLG Partners and KDA Capital, US firm Artisan Partners, Boston-based Wellington Management, Carmignac Gestion and Fidelity Investment Services.