Ministry of Labour
Italian law no. 140 dated 28 May 1997 required public social security institutions to prepare a real-estate disposal plan (the PSC- Patrimonio Straordinario di Cessione—Extraordinary Assets for Disposal) for an overall amount of not less than 1,550 million Euro.
With a pan-European call for tenders, the Italian Ministry of Labour and Welfare selected the G6 Advisor Consortium—of which Romeo Gestioni and Romeo Immobiliare were members, together with Pirelli & C. Real Estate Agency S.p.A., Deloitte Touche Tohmatsu, IntesaBci, and Knight Frank—to manage the survey, appraisal, formalisation and disposal of the assets, providing legal, financial, and commercial consulting as well as technical assistance.
Italian Law no. 410 of 2001 overhauled the existing regulatory framework governing the disposal of public real estate assets, envisaging, among other things, the securitisation of the proceeds from the sales. The title to the properties included in the portfolio managed by the G6 Advisor Consortium was transferred upon payment to a finance company (S.C.I.P.), which issued bonds backed not only by said portfolio but also by approximately 24,000 residential units to be sold directly by the individual Social security institutions.
The G6 Advisor Consortium was reappointed as the entity responsible for managing the disposal of the properties included in the PSC.
Under the disposal plan, all properties were to be sold through a competitive public auction (in the presence of a notary public) divided into two stages:
- in the first stage, each individual batch, consisting of the property (or the group of the building’s non-residential units) was auctioned separately
- in the second stage, the batches remained unsold were grouped into homogeneous portfolios and auctioned once again to investors
The G6 Advisor Consortium successfully connected each ring of the real-estate-market value chain and was characterised by the intent to marry and achieve synergies between technical, economic, financial, legal, and marketing skills.
The activities the G6 Advisor Consortium carried out can be broken down into six areas:
- technical and lease due diligence on the properties
- urban planning and cadastral formalisation
- market analysis and promotion
- marketing and communication
- organisation and management of auctions
- sales assistance to finalise deeds following the auctions
The portfolio consisted of 309 non-residential buildings (or portions of buildings) spread across the entire country
- complete due diligence that can be summarized as:
- acquisition of hard copies of documents to correctly define:
- the origin of and title to the assets (notarial part of the due diligence)
- the contractual, administrative and accounting regularity of the lessees (legal and administrative part of due diligence)
- technical inspections - surveying, graphic rendering, urban planning and cadastral compliance assessments—on all properties to be sold for the purpose of verifying the formal and technical regularity of the assets (technical part of due diligence)
- appraisal of all the assets’ market value; based upon the outcome of the previous steps, the properties were appraised using most of the criteria for making the best estimate of their market value, considering the variety of designated uses of the buildings included in the group. The most widely adopted criteria were the comparative method, the income method, the discounted cash flow method, and the reconstruction cost method. More than one criteria was applied for the same asset; furthermore, for certain properties that could have been actually demolished and rebuilt based on the relevant Technical Implementation Standards (NTA – Norme Tecniche di Attuazione) of the Urban Master Plan (PRG – Piano Regolatore Generale), potential scenarios were considered and specific business plans prepared;
- approval of the appraisals by the Observatory for the real estate assets owned by public social security institutions (the technical coordinating and supervisory body established under Italian Legislative Decree 104/96 to support the Ministry of Labour and the Ministry of Finance)
- the set-up of a multimedia data room where individual investors could examine hard and digital copies of all documents to make their purchase decisions
- promotion through:
- adverts in leading local, national, and international media
- participating in trade fairs and exhibitions, both in Italy and abroad
- road shows in the major European capitals for non-Italian investors
- canvassing carried out by salespeople among local investors
- management of the various steps of the public auctions
- management of the post-auction phase, both with reference to the exercise of the ex-post right of first refusal on the part of the legitimate lessees and the finalisation of the notary deeds for the sale
A colossal and hugely successful operation that involved 869 staff (spread throughout the country and abroad):
- 120 in-house Romeo Gestioni staff, of which 40 multilingual (English, French, and German)
- 30 law firms, for a total of 104 staff
- 65 technical firms, for a total of 195 staff
- 132 appraisers
- 80 notary public offices, for a total of 173 staff
- 145 national and foreign salespeople (located in the main European capitals and who were also involved in the road shows)