Financial management of real estate transactions

3 PHASES IN THE SPIN-OFF

A preliminary phase of inventory of the assets portfolio- An assessment phase (decision making) in which there will be an assessment of the asset's conditions (Instrumental buildings, Income buildings, to be valorized, to- be sold etc) and their related market valueA closing phase in which, for each asset, is stated whether or not is worth to undertake a spinoff operation with the related asset.

TELEMACO IMMOBILIARE: il caso di Telemaco immobiliare è il primo Spin-Off immobiliare in Italia. La società Telecom Italia decide di effettuare due spin offs. Il primo riguarda la cessione di alcuni assets ad una società esistente (Split Operation), the second riguarda la cessione di un'altra quota di assets immobiliari ad una società interamente gestita da Telecom, la Telemaco (Business Transfer).

LEASING IN COSTRUENDO-Leasing in costruendo is a form of private financing of public works, which has already been experimented in recent years.

to the company through a lease agreement. This allows the company to continue using the property while freeing up capital that was tied up in the property's ownership. The leaseback agreement typically includes periodic rental payments and may also include an option for the company to repurchase the property in the future. LEASE AGREEMENT:-A lease agreement is a contract between a landlord (the property owner) and a tenant (the person or business renting the property) that outlines the terms and conditions of the rental arrangement. This includes details such as the duration of the lease, the amount of rent to be paid, and any additional terms or conditions agreed upon by both parties. The lease agreement serves to protect the rights and responsibilities of both the landlord and the tenant during the rental period. CONTRACTING ENTITY:-The contracting entity refers to the party that enters into a contract with another party for the provision of goods or services. In the context of public works, the contracting entity is typically a public administration or government agency that is responsible for overseeing and funding the construction or maintenance of public infrastructure. FINANCIAL ENTITY:-A financial entity is a company or institution that provides financial services, such as banking, lending, or investment services. In the context of public works, a financial entity may provide funding or financing to the contractor or contracting entity to facilitate the execution of the project. CONSTRUCTION COMPANY:-A construction company is a business that specializes in the construction of buildings, infrastructure, or other physical structures. Construction companies are typically contracted by the contracting entity to carry out the design, planning, and execution of public works projects. REAL ESTATE ASSET:-A real estate asset refers to a property or piece of land that has value and can be owned or leased. Real estate assets can include residential, commercial, or industrial properties, as well as vacant land or undeveloped parcels. In the context of leasing contracts, the real estate asset is typically the property that is being leased by one party to another. PERIODIC FEES:-Periodic fees refer to regular payments that are made at specified intervals, such as monthly or quarterly. In the context of leasing contracts for public works, the periodic fees are the payments made by the contracting entity to the financial entity to reimburse the funds advanced for the construction of the project. OPTION FOR PURCHASE:-An option for purchase is a contractual right that allows one party to buy a property or asset at a specified price within a certain timeframe. In the context of leasing contracts, the option for purchase gives the party leasing the property the right to buy it at the end of the lease term, thereby obtaining full ownership of the asset.

In leasing, to the same seller, who periodically pays the leasing fees for a certain duration, with the right to buy back the property sold, paying at the end of the contract the price established for the redemption. The consideration for the sale in substance constitutes a loan to the company in need of liquidity, which will repay the principal and interest through the payment of periodic lease payments on the property.

BENEFITS FOR BOTH PARTIES:

• The seller has access to quick liquidity, without any actual loss of disposition of the assets;
• The seller has the opportunity to invest in these funds to expand its business;
• The leasing company can purchase a profitable real estate asset-CREVAL*-BENI STABILI

In June 2017, the companies "CreVal" and "Beni Stabili" finalised a sale and lease back transaction, relating to a portfolio consisting of instrumental assets for the CreVal Group, consisting of 17 real estate units with a gross floor area of approximately 21,700 sq.metres.

Beni Stabili acquired the portfolio with an investment account for 118MLN euros. The transaction mainly concerned office buildings used by CreVal, mainly located in Milan/Lombardy, together with some portions located in Rome and Sicily. Despite its disinvestment, the portfolio will remain at the disposal of CreVal, through leasing contracts with a duration of between 9 and 12 years, extendable for another 6 years. CROWDFUNDING Crowdfunding is a form of capital raising that takes place mainly online and with the possibility to buy shares with very low amount of capital. Real estate crowdfunding, as well as crowdfunding in general, is divided between lending crowdfunding and equity crowdfunding. Equity crowdfunding allows the private to invest in a real estate project, becoming to all intents and purposes a partner. In lending crowdfunding, on the other hand, all the investor's do is lend money to the company developing the operation, so in fact you are only lenders and to all intents.

and purposes only financiers of that specific operation.

Civic crowdfunding is the use of crowdfunding2 to finance public works and projects by citizens themselves. It is a bottom-up funding method that can actively involve citizens, allowing fundraising through flexible tools that can promote the development of the territory and communities.

Civic crowdfunding in urban regeneration: Crowdfunding helps fund projects for public areas, where the existing buildings, infrastructures or common spaces need to be upgraded (or built from scratch) in order to improve the quality of life.

BENEFITS FOR Public Administration using CIVIC CROWDFUNDING: additional funds for public projects, involvement of citizens, improve civic cohesion.

BLOCKCHAIN-Blockchain technology records and disseminates transnational and other economic, social and political interactions. Information is a very valuable 'asset' in the economy and technologies such as blockchain improve its flow, availability and security.

period of time, along with interest. However, what sets green bonds apart is that the funds raised are specifically earmarked for environmentally friendly projects. Green bonds are a way for investors to support and finance projects that have a positive impact on the environment. By investing in green bonds, individuals and institutions can contribute to the development of renewable energy, sustainable agriculture, clean transportation, and other initiatives aimed at combating climate change. The concept of green bonds has gained traction in recent years, with an increasing number of issuers and investors recognizing the importance of sustainable finance. The market for green bonds has grown significantly, and there are now established standards and guidelines for issuing and reporting on green bonds. In conclusion, green bonds provide a unique opportunity for investors to align their financial goals with their environmental values. By investing in green bonds, individuals and institutions can support the transition to a more sustainable and low-carbon economy.

period of time, plus either a fixed or variable rate of return. (slides)

The European Commission promotes green bonds to lead the investments and the projects that comply with the objectives of the Paris Agreement and the Agenda to counter climate change

REAL ESTATE MARKET

CARACHTERISTICS OF REAL ESTATE MARKET

• SEGMENTATION: Real Estate space market has a high degree of segmentation by property type and geographic location. Rent can change easily depending on these parameters. For instance, all the buildings, whatever their use destination, is classified within classes, which describe dimensions, age, locations and so on.
• ILLIQUIDITY: "Illiquid refers to the state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value. Illiquid assets may also be hard to sell quickly because of a lack of
• LONG TERM INVESTMENT: RE investments takes decades to see profit result
• INEFFICIENCY NATURE OF THE IMMOVABLE ASSETS: Poor data

availability (sale contractual terms, lease terms, management costs).

• LIMITED NUMBER OF TRANSACTIONS
• LACK OF A CENTRAL MARKET PLACE
• HIGH TRANSACTION COSTS (Mainly for direct investments: Real estate agent commissions, notary fee, tax...)

Real Estate SPACE MARKET (aka PROPERTY MARKET)-The RE SPACE MARKET is the one in which we recognize how the location, quality and availability (stock supply) of buildings are the forces which triggers builfing's rents. Thusin RE Space market we analyse the interaction between the demand for rent (whatever the use destination) and the availability of built supply.

Poor supply elasticity: being a long production times, real estate construction, in case of a rapid increase in demand, cannot easilly meet the demand with immediate- new construction. When the demand declines, buildings still remains there, and we can face abandonment.

Segmentation: (guarda su)

Real Estate ASSET MARKET (a part of the larger CAPITAL MARKET)-This

determine the value of real estate assets in the capital market. The capital market includes the public equity market, where REITs (SIIQs) and investment funds are traded, as well as the private equity market, which deals with the ownership of real property assets. Additionally, the capital market consists of the public debt market, where mortgage-backed securities are traded, and the private debt market, which involves mortgages. The relationship between the asset market and the space market can be represented by the 4 Quadrant Model. This model shows that equilibrium is achieved when the points and curves form a rectangular or squared shape. To summarize, the property market determines rents based on the stock of available space. These rents are then translated into property prices in the asset market. The value of real estate assets in the capital market is determined by these asset prices.

generate newconstruction that, back in the property market, eventually yields a new level of stock. The combined property and asset markets are in equilibrium when the starting and ending levels of thestock are the same.^ If the ending stock differs from the starting stock, then the values of the four variables in the diagram (rents, prices, construction and the stock) are not in completeequilibrium. If the starting value exceeds the finishing, then rents, prices and construction musT all rise to be in equilibrium. If the initial stock is less than the finishing stock, then rents, pricesand construction must decrease to be in equilibrium.

Changes with increases in macroeconomy (income growth, production or number of households) – 4QM-Economic growth, then, increases all equilibrium variables in the real estate market, whereas economic contraction leads to decreases in all variables.The magnitude of the changes in these variables depends on the slopes of the various curves. For example,

If construction were very elastic with respect to asset prices, then the new levels of prices and rents would be only slightly greater than before, whereas construction and stock would expand considerably.

Increase in DEMAND: Increases in employment, production, or the number of households would increase the demand for space, shifting out the demand curve in the NE. For a given level of real estate space, rents must therefore rise.

Increase in PRICE: These higher rents then lead to greater asset prices in the NW quadrant which, in turn, generate a higher level of new construction in the SW quadrant. Eventually this leads to a greater stock of space (SE quadrant) which can possibly cause a decrease in demand. In the new equilibrium, neither rents, prices, construction, nor the stock can be less than in the initial equilibrium.

Decrease in PRICE: this would mean a lower (or null) level of construction. If the construction decrease it is possible that the total stock of available space decrease.

This will possibly lead to an increase in the demand. If the ending stock differs from the starting stock, then the values of the four variables in the diagram (rents, prices, construction and the stock) are not in complete equilibrium.