Italy beats Brexit as private equity strategy, says Patron

Bloomberg

A flood of soured assets will come on the market in Italy if a referendum to overhaul the political system is approved in the autumn, said Keith Breslauer, founder and managing director of Patron Capital Partners.
“The opportunity in Italy is far greater” than in the U.K. after it voted to leave the European Union, Breslauer said in an interview. There are about €350 billion of distressed real estate assets remaining in Europe, about half of which is “real garbage,” he estimates.
Patron has raised €949 million for its fifth fund, which will target distressed and undervalued real estate in western Europe, it said in a statement on Tuesday. The London-based private-equity company will add leverage and invest in as much as €3 billion of real estate-backed corporate investments and individual properties.
Italian PM Matteo Renzi is staking his career on a referendum to overhaul the political system that is expected to take place in October or November. The country’s bank support fund Atlante will likely be expanded if Renzi wins, which will help Italy’s lenders take further impairments on soured real estate loans, Breslauer said. That will make it easier for them to be sold, he said. Italian lenders hold about €66.4 billion of non-core real estate loans, broker Cushman & Wakefield Inc. estimated.
“What we have seen with Brexit is that anything with income is flying out the door. Anything that’s secondary or which needs fixing really has no bids,” Breslauer said.