Massimo Vitali, you’re at the helm of one of the most go-ahead groups in Italian real estate. Your business model is organized around five well-defined areas, though they’re all related to construction in one way or another. Was that arrangement chosen as a way of coping with the crisis, or does it match the particular characteristics of your business?
Vitali has been working in the construction industry for nearly a century: we’re mainly engaged in infrastructure work and office buildings. Over the years the Vitali Group has achieved real vertical integration along the entire chain of production and management; nowadays it has the status of an international operator, with its own quarries and other facilities for extracting and recovering raw materials (building materials like asphalt, concrete and aggregates); its own specialist capabilities in rehabilitation and demolition; its own in-house urban design and development department; its own resources in staff and machinery wholly dedicated to actual construction; and all the organization and resources needed for arranging financial, investment and management solutions for what we build. This complete vertical integration makes Vitali a reliable and flexible partner, capable of keeping costs under control and meeting deadlines.
Now despite the crisis in the whole industry, all this has enabled us to meet some outstanding targets in 2009, in terms of operating profit (20%) and cash flow (€20m). In particular, there have been our investments in the new infrastructure installed at Caponago in Milan Province: Italy’s biggest asphalt production facility, with a production of 600 tonnes an hour. Staff numbers have grown by around twenty, and we expect to hire more soon.
In the last two or three years you’ve become one of the leading operators in the Italian real estate market. What have your strategies for growth been in this sector?
In property, we’ve always worked to order, setting up one-off structures for big multinationals. Vitali sees to its customers’ needs from their initial specification all the way through to completion of the building they wanted: choice of optimal location, preparing the design and planning the project, agreeing the timetable, drafting the contract (lease or purchase), and also managing the building once it’s completed.
You’ve been very busy recently building industrial estates (Peschiera Borromeo, for instance, in Milan province, and Stezzano on the big motorway corridor between Milan and the north east). Why have you decided to focus on this kind of property venture?
The industrial/logistics component is certainly there: it’s very well represented by the developments at Roncello, Basiano and Cividate; but in real estate today – a sector just coming out of a severe crisis – you have to diversify, be flexible enough to anticipate what the market wants. So the projects we offer range from Retail Parks to big logistics centres to big HQ buildings for multinationals, all created under the “built to suit” formula, really tailor-made to fit the needs of our customers, with the very highest energy-saving and space-planning standards, and all benefiting from the LEED certification of our Peschiera Borromeo facility.
The decision to work on the Milan – Bergamo corridor and the hinterland east of Milan was taken against the background of a broader plan for the future development of the whole area thanks to the new traffic engineering arrangements guaranteed by two highway projects, TEM [Milan Eastern Orbital] and BREBEMI [Brescia –Bergamo – Milan]. That’s in addition to companies’ historic preference for setting up in the area east of Milan. Firms can relocate and cut costs while still ensuring good communications; retailers can make sure they have a high profile and easy access; and, last but not least, manufacturers and logistics firms are strategically linked into the main traffic axes of Italy and Europe: the A4 autostrada which is an integral part of the huge Corridor 5 artery linking eastern and western Europe.
Your real estate activities are designed for selling product to operators or investors. Have you also got any income-generating projects of your own?
Our activities in fact aim at both objectives: specifically, we build to order when it’s a matter of logistics or industrial developments, while a sizeable proportion of our building work is done for institutional investors. Most of our buildings are development projects, but some are for income generation: that applies both to newly completed buildings and to ones that need a change of status.
Have you ever considered setting up an asset management company of your own, so as to expand into property finance as well?
We’ve evaluated the suggestion, but we’d rather use outside contractors who are completely independent of our Group, so as to avoid the slightest conflict of interest.
What are the characteristic guidelines for your future operations?
Over the years the Group’s hallmark has always been its excellence in constructing buildings with outstanding energy efficiency. We specialize in designing and building tailor-made HQs, retail complexes, hotels and industrial buildings for our customers. The buildings we create use advanced technology and achieve a high degree of environmental sustainability: they stand out for their low energy consumption and limited environmental impact. These are the guidelines we intend to follow in our future developments as well: especially efficiency in the use of space (levels of 10m2 – 12m2 per worker), reduced running costs (70% less than traditional buildings), LEED certification (“green” constructions embodying solutions designed and built with care for the environment) and the use of cutting-edge materials (like continuous facades that offer k-values of 1.9, for instance). The Melegnano and Caponago projects – accommodation, retail and logistics developments – are going to be built in accordance with environmentally sustainable building standards that we have already been working to for some while.
Do you regard the Italian market as an attractive one for a foreign investor? And if so, what sector would you suggest looking at in particular?
Foreign investors are indeed attracted to the Italian market. The growth margins in Italian real estate are still very high, and our system’s pattern of management/ownership still offers some very big growth opportunities. The country is sound; levels of leverage are still comparatively low. There are two main kinds of foreign investor – core investors and opportunists – and both are looking for a new, high-quality product with a cash flow guaranteed by tenants of impeccable standing.
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Click here for Massimo Vitali profile