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MILAN-For the third time in 18 months, GE Real Estate has secured a major pool of non performing loans here, buying a $3.8-billion portfolio from Banca Antonveneta and Interanca in a 50/50 partnership with Pirelli RE/Calyon. The investment was made through two subsidiaries, GE Real Estate Italia and GE Corporate Financial Services.

“This transaction is evidence of our commitment to grow our NPL (non performing loan) business and our proven ability to execute large deals even in more unsettled markets,” says GE Real Estate Europe president Olivier Piani in revealing the agreement. The purchase is the second tranche of a portfolio that GE and its partners committed to acquire last year, and it follows the closing of the first piece in January for $2 billion. The total package comprises more than 20,000 loans covering a range of commercial, corporate and real estate assets across Italy.

Giuseppe Recchi, president and CEO for GE Italy, calls the investment “part of GE’s renewed commitment to be a long-term and permanent player in the Italian market.” The company’s initial Italian NPL deal was for $2.6 billion, a pact struck in the spring of 2006 between the US-based investor and Unicredit Group.

“We are actively seeking to acquire more restructuring portfolios in Italy and throughout Europe and help financial institutions manage their risk,” says Piani. The latest sale is the second largest ever for an NPL pool in Italy.

GE Real Estate is increasing its exposure to commercial real estate throughout Italy in other ways, including direct investment into product types such as retail and office space. The company is taking a multi-pronged approach throughout Europe, recently expanding into new territories such as Russia and last week buying 31 German properties for $301 million, a deal previously detailed by GlobeSt.com.

Pirelli RE will service the combined portfolio acquired from Banca Antonveneta and Interanca and handle asset management duties as well. A management company, Pirelli has increasingly turned its attention to NPLs, an area it anticipates will continue to expand through 2008. By one estimate, the Italian NPL overhang is valued at about $50 billion. While it is a fraction of the $450 billion in Germany—Europe’s largest NPL market—Pirelli predicts opportunities will rise as consolidation of the Italian banking system continues and institutions address new regulations mandating them to clean up balance sheets. Pirelli is also active in the mature German NPL market, and company officials maintain that experience has prepared the firm to handle the expected wave of Italian business.

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