Prelios SGR is part of the Prelios Group, a vertically integrated leading Italian player offering investors and banks a one stop-shop for alternative asset management and high value-added services across the real estate and credit value chains, with approximately €40bn of assets under management.
Prelios SGR is one of the leading asset and investment management companies in Italy with a focus on real estate and credit. It manages 45 real estate funds, 4 SICAFs and 2 credit funds, with around € 8.1 Bn (1H 2023) of assets under management.
Prelios SGR has been a pioneer in fund management with the launch of new investment products and has expanded its product offer by setting up one of the first Italian SICAFs and an innovative credit fund that to date ranks as the biggest credit fund managing Italian UTPs (Cuvée Fund).
Prelios SGR currently serves 100+ high-standing Italian and international institutional investors, thanks to its considerable know-how and expertise in providing tailor-made services.
Prelios SGR integrates best practices inspired by ESG principles in its day-to-day activities and investment processes. It is a signatory of PRI and part of GRESB.
Prelios SGR executes and manages transactions covering the full risk spectrum.
Performance verification
The performance of each fund is measured and analysed on a regular basis: annual and quarterly/semi-annual reports provide investors with progress on portfolios.
Sector forecasts
INDUSTRIAL: The industrial sector is the leading asset class for RE investment in Italy, despite a decline in transaction volumes, numbers and individual deal sizes compared to 2022. Strong performance in the occupier market continues to fuel a highly positive outlook on rental rate growth, fostering investments in core+ and value-add transactions. Demand for space shows no signs of abating in this sector, reaffirming Italy’s position as one of the top performers among European logistics markets, both in terms of absorption rates and growth margins. In line with the first half of the year, interest on investments in long-term leased industrial properties to manufacturing companies with strong covenants is on the rise. Increasing stability in European monetary policy and the reduction of construction costs could be positive drivers for next year.
OFFICE: In the current scenario, the office asset class is witnessing a sharp reduction in investment volumes accompanied by an increasing need for price adjustments, particularly for value-add properties and real estate assets already valued in secondary locations. On the other hand, there is still substantial liquidity for core properties in Milan, surpassing even the most robust European markets. Investor interest appears to be quite divided: core assets in the Central Business District continue to be attractive, with highly positive expectations for rental rate growth, while in more peripheral areas, investors exhibit a cautious approach due to uncertainties about future occupier space demand. The dichotomy in the Italian office market between prime and non-prime office buildings has widened. Buildings lacking ESG factors are often excluded from institutional investors’ spectrum of targets. Alternative work organisation strategies imply the reshaping of preexisting physical office space, resulting in the growth of hybrid models where different asset classes coexist.
RESIDENTIAL: The consolidation of the living sector has slowed. Private equity funds and developers maintain significant interest in build-to-rent and PBSA, but construction costs, high debt expenses and bureaucratic uncertainties hinder new developments in the absence of stabilised products. We observe robust activity in the conversion of office spaces into living spaces in peripheral locations of Milan. The build-to-sell market remains robust and acts as a driving force for the sector. The Italian residential market is experiencing a period of adjustment, with a decline in transactions and price correction. The Italian senior living segment is showing an increasing interest with a consolidation expected in the coming years. Increasing stability in European monetary policy could result in improved consumer expectations and mitigate the current negative price momentum.
RETAIL: In the retail sector, strong interest persists among net lease buyers for medium-sized properties leased to well-established, long-term operators. We are now seeing a more significant investment pipeline in shopping centres, driven in part by newcomers who recognise discounted opportunities, especially in larger centres with strong fundamentals and market dominance. The retail sector is strongly threatened by the continuing growth of e-commerce and innovations in digital marketplaces.
OTHER: The alternative sector is experiencing a notable surge in investment volumes, primarily propelled by platform transactions within the healthcare industry. Despite relevant entry barriers, such as the scarcity of stabilised assets, the transaction data reflect considerable investment appetite in these markets. Particularly noteworthy is the increasing interest from private equity firms seeking competitive returns, who are investing strategically in operational facilities across sectors with robust fundamentals. The sustained momentum in this sector signifies its potential as a lucrative investment option, despite the inherent challenges, and highlights for example the attractiveness of healthcare-related assets in the current investment landscape. Real estate debt: funding from banks has already slowed and is expected to decrease further in the short/medium term, due in part to regulatory and balance-sheet pressures. This, coupled with the very limited number of Italian real estate credit players, represents a solid opportunity with potentially very interesting returns on a risk-adjusted basis.
Investment principles & strategy
Since its foundation in 2001, Prelios SGR has been dedicated to creating and implementing real estate investment and asset management strategies for institutional investors. It offers investors a wide range of investment solutions throughout Italy, including separate accounts and club deals across core to opportunistic strategies. We favour a long-term sustainable approach focusing on yield, value creation and capital preservation or appreciation, depending on strategy, with transparent management and regular communication to our clients. Prelios SGR is dedicated to offering tailor-made solutions based on market and gap analyses, together with a thorough due diligence for each investment, as well as optimised fund and investment structuring alongside proactive management, risk control and constant monitoring. Prelios SGR incorporates risk assessment and ESG metrics at all stages of the investment process, developing customised solutions for investor needs in terms of sustainability and impact investing. Prelios SGR is committed to increasing the number of properties with LEED, BREEAM or WELL certification, to reduce impact on the environment.
Strategic corporate development
Strengthening relations with clients and operating as their partner of choice, meeting the needs of new clients, while reinforcing governance, operational and risk-management frameworks and focus on ESG topics will remain pivotal activities. Developing new forms of local and international partnership will also be a focus. Prelios SGR is also working on developing private equity funds as a new segment to add on top of real estate and credit ones.
As of today, Prelios SGR activities include projects intended to have an impact on the real economy and be socially meaningful, covering some market gaps and/or providing systemic solutions such as:
- Prelios SIIF – Social Infrastructure Impact Fund (SFDR 9): interventions on social infrastructures, including student housing, senior living and healthcare;
- Prelios RELF – Real Economy Lending Fund (SFDR 8): direct lending to SMEs with potential but facing temporary economic difficulties;
- Prelios RED – Real Estate Debt Fund (SFDR 8): originating real estate backed loans;
- Prelios Multi originator UTP: contribution fund focused on segment-specific or across-the-board UTP credit management (eg, Project Cuvèe and Project Phoenix);
- Prelios PETF – Private Equity Transition Fund (SFDR 8): investing equity in a diversified portfolio of SME companies across Italy.
COMPLIANCE STATEMENT
Through its compliance officer, Prelios SGR guarantees that all corporate activities are supported by constant compliance with current legal and regulatory frameworks, corporate procedures, and fund term sheets. It verifies that corporate procedures ensure prevention of breaches of legal and regulatory frameworks and guarantee compliance with self-regulation standards in terms of monitoring client activities for money laundering practices. Corporate procedures are also aligned with protection of personal data processed by the SGR, also on behalf of the managed alternative investment funds. The compliance officer reports directly to the Board of Directors and the Board of Auditors and is hierarchically autonomous with respect to the operating units.
