Doughty Hanson & Co Real Estate, the real estate business of the UK-based private equity firm, has achieved a further realisation from its Doughty Hanson Real Estate Fund, selling the L'Oréal Italia headquarters building in Milan to German open-end funds, WestInvest Gesellschaft für Investmentfonds (WestInvest).
The transaction, valued at more than E70m, provides the fund with its second exit in Italy in the last three months, following the sale of Bodio Properties, owner of the Bodio Center office development in Milan, to German fund DEGI (Deutsche Gesellschaft für Immobilienfonds), a subsidiary of the Allianz Dresdner real estate group, for more than E200m.
Doughty Hanson acquired the derelict site in February 2001 and developed it into a 33,000 square metre complex of office space for L'Oréal, the international cosmetics brand. Doughty Hanson Real Estate acquired the site at a court-administered liquidation auction before bringing minority partner BPD Property Development into the transaction, and creating an Italian operating platform, Europa Risorse, to manage the redevelopment project.
The firm has not disclosed its initial investment in the site, although a source close to the firm put the projected return on investment at 2.5 times. The sale of Bodio delivered in October a 3.3 times return on cash invested.
The Doughty Hanson & Co European Real Estate Fund was established in 1999 and comprises equity commitments in excess of $630m from institutional investors worldwide. The fund has made investments totalling over E1bn. With the proceeds of the L'Oréal Italia sale, investors in Doughty Hanson & Co Real Estate will have received cumulative distributions of almost 70 per cent of cash invested.
Since 2000, Doughty Hanson Real Estate has completed 20 acquisitions in seven European countries and initiated over 600,000 square metres of office and residential developments across Europe, independently or in joint venture with local developers. The group is overseen by Marc Mogull, a managing director.
Doughty Hanson & Co Real Estate was advised on the sale by Cushman & Wakefield Healey & Baker and Morano & Associati. WestInvest was advised by DLA Group.