Mediobanca consortium wins Blackstone’s Milan jewel

An all-Italian consortium led by Mediobanca has beaten stiff competition from foreign investors to buy Palazzo Poste in Piazza Cordusio, in the heart of Milan, for €246.7 million.

Blackstone had put the building on the market in September expecting to get over €220 million for its prize Italian asset.

The US private equity company had bought Palazzo Poste, which formerly hosted the stock exchange and then the Italian postal service, in 2015 for €130 million, a price which included two adjacent buildings.

Blackstone has since invested €23 million in restoring the listed palace, built in 1901, which hosts Italy’s first Starbucks café and the offices of JP Morgan, Natwest and Kryalos, among others. The sale is in line with the company’s strategy of buying, improving and selling at a profit within a few years.

In 2015 there were few international big names brave enough to invest in Italy. Since then Milan has seen a huge influx of foreign capital from the US, the Middle East, China and Europe.

After a few weeks of negotiations Mediobanca, Italy’s leading investment bank, has clinched the deal putting on the table a higher offer than other competitors including Allianz, Deka and PGIM.

Sale highlights twin trends

The level of interest for the Piazza Cordusio asset highlights two current trends, driven by the coronavirus pandemic: investors’ focus on prime buildings with strong tenants in central locations and the re-emergence of domestic investors ready to exploit local opportunities in a less competitive field.

Mediobanca Private Banking is representing a consortium of private investors, small pension funds and family offices. Kryalos, Blackstone’s long-standing partner in Italy, will continue to manage a dedicated fund for the 11,000 sq m Palazzo Poste, which is expected to provide a 3.2% yield. 

Last year Mediobanca had already agreed a €100 million deal to buy another nearby building in Via Santa Margherita, part of the portfolio of three the US company had acquired in 2015 along with Palazzo Poste.