Daniel Buaron says First Atlantic, founded in 1998 and now 70%owned by Italy's diversified De Agostini group, has $4.3 billionunder management in 130-plus assets, of which $3.6 billion inItalian SGR closed funds and another $764.8 million managed forthird parties. One primary client has been Whitehall Funds, thereal estate arm of Goldman Sachs, but its fund is currently in aliquidation phase. First Atlantic Real Estate began raising its ownfunds in 2006.

To supplement the equity, leverage is available post-crisis.Italian banks are lending up to LTV of around 60% but it remainsdifficult to move above that. "Our approach is really to add valueand we are very hands-on," says Buaron. "With Whitehall we advisedthem in several situations to refurbish assets before selling." Inone well-timed move, it persuaded Whitehall in July 2007 to acceptaround $1.3 billion for a portfolio, even though it was reluctantto do so. "I couldn't forecast the global crisis but I could seethat the price we were being offered was fantastic," he says."While most of the others were caught in the crisis, we have nothad any default on funds or assets that we manage."

How does Buaron assess the Italian market at present? "In Italywe didn't have the big drop in values that occurred in some othercountries. There was an increase in cap rates, and it is stillthere. But there is a huge difference between prime and semi-prime.Prime goes at 5% or less but there are very, very few of these kindof assets. The big issue in Italy is that in the centres of townslike Rome or Milan you don't find anything genuinely A-quality. InMilan I know maybe 15 buildings that are prime tenant, A-quality,long-term lease so that when one comes for sale you can getfantastic levels of cap rates. In fact, this is exactly our game:to buy something that is not really A-quality and transform it byrefurbishment and capex, eventually selling to long-term investors.For property not A-Grade you go to maybe 6-1/2% in cap rates, andeven 7-1/2% in some cases."