Luxury conglomerate seeks to reduce €10.5 billion debt burden through potential sale of record-breaking Italian real estate acquisition
Luxury powerhouse Kering is reportedly in advanced negotiations to sell a majority stake in its prestigious Montenapoleone 8 palazzo in Milan to Qatar’s royal family, marking a strategic pivot as the French conglomerate grapples with mounting debt pressures and challenging market conditions.
According to sources familiar with the matter, Kering is looking at selling a majority stake in the company through which it owns the building, based on a “similar valuation” to its €1.3 billion acquisition price. The potential buyer is identified as a vehicle linked to former Qatari Prime Minister and real estate billionaire Hamad bin Jassim bin Jaber Al-Thani, uncle to Qatar’s current emir.
Strategic Real Estate Repositioning
The negotiations represent a significant shift for Kering, which completed the record-breaking acquisition of the 18th-century palazzo from Blackstone just 16 months ago in April 2024. The transaction, valued at €1.3 billion, remains Italy’s largest single-building real estate investment to date. The historic property currently houses the iconic Cova pastry shop and a Saint Laurent boutique, spanning over 5,000 square meters of prime retail space across five floors.
The deal could help the French luxury group cut its debt, which ballooned to more than 10 billion euros ($11.58 billion) in 2024, following a series of expensive acquisitions. This debt burden has become increasingly problematic as Kering faces headwinds in the luxury market, with flagship brand Gucci experiencing double-digit declines for consecutive quarters, including a 25% drop in Q2 revenues.
Market Pressures Drive Divestiture Strategy
The potential Qatari transaction aligns with Kering’s broader asset optimization strategy under CEO François-Henri Pinault. Earlier this year, the company divested a portfolio of three Parisian properties and two Italian luxury outlets to Ardian, generating capital ahead of its planned full acquisition of Valentino from Mayhoola—another Qatar-linked investment vehicle—by 2028.
Industry analysts view the move as a pragmatic response to luxury market volatility. Kering’s aggressive real estate expansion, which included premium acquisitions on New York’s Fifth Avenue and in central Paris, was executed during more favorable market conditions. The current economic climate, marked by reduced luxury spending and geopolitical uncertainties, has created pressure to optimize capital allocation.
Qatar’s Growing Italian Footprint
For Qatar, the potential acquisition would represent another significant addition to its expanding European real estate portfolio, particularly in Italy’s luxury sector. The Gulf state has demonstrated sustained interest in premium Italian assets, with various royal family investment vehicles actively pursuing high-profile acquisitions across the peninsula.
The timing appears strategic for both parties: Kering gains financial flexibility to navigate market challenges and complete its Valentino acquisition, while Qatar secures a trophy asset in one of Europe’s most prestigious luxury shopping destinations. Milan’s Quadrilatero della Moda district, where the palazzo is located, remains a global luxury retail epicenter, ensuring long-term value retention.
As luxury markets continue to evolve post-pandemic, this transaction could signal broader industry consolidation trends, with sovereign wealth funds and private capital increasingly acquiring prime real estate assets from traditional luxury conglomerates seeking operational flexibility.
Neither Kering nor representatives of Hamad bin Jassim bin Jaber Al-Thani responded to requests for comment regarding the reported negotiations.
Source: Milano Finanza
