• Italian bank sold two thirds of $2.8 billion target in 2015
  • Lender plans to set up fund to convert and sell branches

UniCredit SpA, Italy’s biggest bank, raised about 1.5 billion euros ($1.7 billion) selling real estate in Austria, Italy and Germany last year, completing more than half of the company’s four-year disposal target.

“Our disposal plan of offices and former headquarters is proceeding at a fast pace as investors showed huge interest for our assets,” Paolo Gencarelli, head of UniCredit’s real estate unit, said in an interview in his Milan office. “We have a pipeline of 1 billion euros of disposals.”

The bank expects to sell about 400 million euros of properties this year, chipping away at its target of 2.5 billion euros by 2018, Gencarelli said. About two thirds of the money raised last year came from the sale of Austrian properties, including the Wien Mitte shopping center bought by Morgan Stanley Real Estate investing and Vienna’s 252-meter tower Donatorum, purchased by Blaguss Group.

UniCredit is selling assets as Chief Executive Officer Federico Ghizzoni tries to bolster capital, which lags peers measured against minimum requirements set by the European Central Bank. The lender is struggling to boost profit margins under pressure from low and negative interest rates and stricter capital rules, a task compounded by a complex structure spread across 17 countries.

Property Fund

UniCredit plans to set up a property fund to dispose of branches valued at as much as 400 million euros, Gencarelli said. The bank aims to sell a majority stake in the fund to investors so it can remove the offices from its balance sheet.

“We are seeking an operating partner to transform the branches into retail before selling them,” he said. Unicredit is considering branches that may be vacated in three to six years and plans to rent the properties for a few years in an effort to attract investors, Gencarelli said.

UniCredit is in talks to sell a portfolio of Austrian assets that include DC Tower 1 in Vienna. It’s also discussing a sale and leaseback deal of its headquarters in Prague and is offering part of a group of properties owned by Nuova Compagnia di Partecipazioni SpA.

“In the next months, we expect to finalize the disposal of two historical buildings in Rome,” Gencarelli said. UniCredit expects annual savings of about 250 million euros after from 2018, when the disposal process will be completed, Gencarelli said.

UniCredit cut 730 branches from 2013 to 2015, and plans to eliminate 400 corporate offices by 2018 as part of Ghizzoni’s plan to curb risk and cut expenses.

“We want to reduce and reorganize the space used by the branch network,” Gencarelli said.

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