Italian fund manager EstCapital has announced that its Città di Venezia real estate fund has become operational with the transfer by the city of Venice of seven properties in exchange for fund units worth EUR 41 mln. In addition, the fund acquired a further 11 properties in January from the municipality for a total sum of EUR 41.5 mln. The transaction price includes EUR 35.5 mln in debt provided by Unicredit Corporate Banking, while a further EUR 6 mln in equity will be disbursed in March 2010.

The portfolio consists of 21,500 m2 in commercial assets, including a number of historical buildings such as Palazzo Diedo, Palazzo Gardenigo, Palazzo San Cassiano, as well as plots of land covering 31,000 m2.

In November, EstCapital won an auction organised by the municipality to manage some of the city's property assets. A partnership of SGR Estcapital and Unicredit Corporate Banking emerged ahead of 11 bidders including Pirelli Real Estate for the creation and the operation of the fund. The assets were previously used by the municipality and will now be vacated and converted to commercial use.

The fund is the third to be set up by Italian municipalities following the launch of similar property funds by the cities of Milan and Turin. Estcapital was advised by Palladio Corporate Finance and law firm Pirola Pennuto Zei e Associati through its partner Gianluca Saccoccia.