UK bond investor backs Rome hotel development with debt package

Source : Real Estate Capital - 26 01 2016

Italian property company Gruppo Statuto has placed a €59 million bond to finance the conversion of a Rome office building into a luxury W Hotel.

The company raised five-year debt at a coupon of 6 percent for the €70 million acquisition and redevelopment of the former BNL bank building in via San Basilio in central Rome.

Debt advisers First Growth Real Estate Finance, which recently opened a Milan office, and Three Stars Capital Partners, advised Gruppo Statuto on raising the finance, structuring and placing the bond with one London-based institutional investor and listing it on the Vienna stock exchange.

The 9,250 sq metre building will be converted to a five-star, 97-key W Hotel which will be operated by Starwood.

Structured in two tranches to fund the investment and a capital expenditure facility, the bond was issued by San Basilio Property and illustrates the gradually increasing liquidity for Italian real estate. Since the decreto competitività law was introduced in August 2014 it has been easier for international lenders to operate in Italy. Previously only finance companies with a banking licence could originate loans without being heavily taxed.

The parties said that the “aggressive” pricing “further demonstrates the increasing liquidity in the Italian market for development financing, albeit for reputable entrepreneurs with a vision to carry forward high quality projects.

“Institutional debt and equity investors seem increasingly attracted to the Italian real estate market, as demonstrated by recent financings and IPOs in the works.”

The Statuto group owns a number of other luxury hotels in Italy as well as prime real estate in London and New York. Rome’s new W Hotel will be the second it has developed with Starwood; the first is in Milan and opens next year.

The group also owns the Four Seasons and Mandarin Continental Hotels in Milan and the Danielli in Venice.

First Growth opened an office in Italy last year after being appointed by Commerzbank’s Hypothekenbank Frankfurt to wind down its remaining Italian real estate loan book, valued then at around €1 billion.