Prelios weighing up hive-off of €300m investment arm

The Italian-listed Prelios said it was looking to hive off the remainder of its investment activities as part of its strategy to reposition itself as a pure asset management group. The company (known in a previous incarnation as Pirelli Real Estate) has been disposing of its real estate holdings, including the €917m sale of its 18,000-unit DGAG German residential portfolio, jointly held with Deutsche Asset & Wealth Management (ex-RREEF) to listed Buwog last year.

In a statement, the Milan-based Prelios said, “Activities aimed at verifying the feasibility of a transaction for the spin-off of the investment activities and the service activities are continuing,”

Prelios has held several meetings about the operation, which is “progressing successfully”, it added during the first-quarter result announced in mid-May. “Subject to the approval of the company's lending banks, Prelios is confident of finalising the agreements in a reasonable time, to be followed by… technical activities and operations, also including the transfer of business relating to the investment activity of a separate special purpose vehicle,” the company said.

The company halved its net losses in the first quarter of the year, reporting a loss of €6.1m versus a loss of €13.4m in the same period a year before.

Revenues from the management platform – now Prelios’s core business - fell to €13m from €16.9m in 2014, largely as a result of disposals and a fall in assets under management. EBIT from the management platform came in at a negative €3m compared to a loss of €1.6m in the same period a year earlier.

As part of the group’s new corporate strategy, Prelios concentrates in Germany on development, transaction and management services for retail and commercial property, Prelios recently presented its plans for a new 12,000 sqm shopping centre in the northern German coastal city of Husum. The inner-city centre is built around a previous Hertie department store, and managing director Martin Mörl said recently that Prelios is looking for similar-sized German towns that could profit from creative solutions with fresh impetus and contemporary tenant mixes that integrate traditional local retailers (such as C.J. Schmidt in Husum) at the heart of newer downtown retail developments.

Prelios manages other centres for regional investors in Hamburg Altona, Constance on the Swiss border, and Marburg in northern Hesse, along with a number of department stores in Berlin.