Large sovereign funds (from Qatar to Singapore), private equity firms, real estate and retail operators have been following the announced sale of Grandi Stazioni, the railways station management company 60%-owned by Italian state railways Ferrovie dello Stato and 40%-owned by Eurostazioni (Pirelli, Caltagirone, the Benetton family and a small share by French railways company Sncf).
The plan, led by new chief executive Paolo Gallo, is getting underway. Firstly, the company will be split in three arms so to transfer the commercial activities to a specific vehicle: Gs Retail will be created along with Gs Rail (infrastructure) and Gs Real Estate (property close to the stations, for an equity value of €20-30 million, to be sold gradually). Later, before the summer, an international process will follow to find the future buyer.
The retail arm is for sale, and the real estate arm may come up for grabs in the future.
But why so much interest from foreign investors? Grandi Stazioni, which manages Italy’s 14 largest rail stations, represents a unique case in Europe for its expertise in revamping railway stations to transform them in meeting and retail points.
The figures at stake are high: more than 500 stores opened so far, which will become 900 at the end of the renovation works; 700 million visitors every year (300 million only between Roma Termini and Milano Centrale, the two largest stations), 1.5 million of square meters of real estate. And, especially, more than €900 million of investment combined to redesign the stations in Italy and two others in the Czech Republic (Prague Central and Marianske Lazne).
Gallo's company has “exported” abroad its winning model of renovation and overhaul, winning in 2002 the contract offered by the Czech railways Ceské dràhy to renovate and manage Prague Central for 30 years (for an investment of €43 million).
Investors are drawn not only by the return on investment in retail spaces, but also from future plans, starting from Roma Termini, where there is already an investment plan of €140 million and which is now in a second phase of development with the building of a new level of services with food court and commercial activities.
The diversification of stations has allowed the company to book over €200 million of revenues in 2014, which Grandi Stazioni hopes to complete by at least 80% as the projects come to an end.
Another appealing factor is the profitable multi-year concession contracts awarded in the stations and which, for potential investors, represent a sort of “insurance” against the future.
In Italy, the contracts last 40 years starting from 2000, while in the Czech Republic they will expire 30 years after the completion of the works still underway. They also foresee the single management and functional renovation of the real estate complex.
The contract for the Tiburtina Station in Rome will instead expire 30 years after the works were completed in 2013, while for the Galleria Commerciale in Naples, in Garibaldi square, the contracts last 35 years, starting from April 2015.
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