➤ Major companies in good health pushing for rent reductions from landlords are behaving irresponsibly and are "the worst family members of the common economy," said Manfredi Catella.

➤ He believes Italy must be very careful about how it reopens its economy and urges the government to inject the necessary liquidity to bolster its recovery.

➤ The Italian hotel sector is at risk of seeing considerable distress as it is fragmented, with many assets owned by small, independent businesses, he said.

Manfredi Catella is chairman of Coima S.R.L., a shareholder and CEO of COIMA SGR S.p.A., and founding shareholder of COIMA RES SpA SIIQ. The COIMA group has more than €6 billion of property assets under management across the office, retail, industrial and logistics, hospitality and tourism, and other segments. Over the past 15 years, he has been responsible for the Italian activity of the US group Hines Interests LP, overseeing an AUM of more than €5 billion, acquisitions of more than €3 billion and negotiating the financing of agreements of approximately €3 billion. This includes the development project Porta Nuova in Milan, with an investment totaling €2 billion. Previously, Catella worked at JP Morgan in Milan, Caisse Centrale des Banques Populaire in Paris, Heitman at Chicago and at HSBC.

S&P Global Market Intelligence: Italy has so far been the worst affected country in Europe from the coronavirus pandemic, with almost 30,000 deaths as of May 4 and severe economic damage inflicted as result of the lockdown measures to delay the virus' spread. With the number of deaths per day now steadily decreasing, the Italian government is making plans to reopen the economy. As a prominent figure in the Italian real estate market, what do you think is necessary for the economy and the real estate sector to recover as quickly as possible from this crisis?

Manfredi Catella: The process of unlocking the economy is going to be a very important decision. Hopefully, this happens as soon as possible. At the same time, this obviously should be combined with a highly professional unlocking protocol. It shouldn't just be about reopening everything, clearly. The reopening needs to be done in a very safe and smart way. The timing, but also the quality of the approach, is going to be very important.

The second one is the effectiveness of the liquidity injected into the system by the government. To be a little bit simplistic, you could say that the coronavirus is making the private sector shut down for three months. If you theoretically could inject an amount of capital equal to the turnover that the private sector has lost in those three months, then the economy can restart back to normal. Obviously, I'm deliberately oversimplifying. But the closer we get to a situation like this, the stronger the safety net and the quicker the economy will recover.

Many companies have been severely hit by the lockdown measures. Across various markets, there are stories of landlords and tenants clashing over rent payments. Has Coima experienced any difficulties with its occupiers?

It's been quite interesting to observe how some companies are behaving. There are some big companies who are opportunistically trying to speculate on the situation, trying to get a bargain on rents from their landlord. These companies should really be put on stage. When I hear about a major consultancy firm or a major bank writing to the landlord, looking for an opportunity from this situation, I think it is a really irresponsible approach to the economy. We're all connected.

We as a firm are committing to pay all our obligations, to respect all our stakeholders, and not to ask anything from anybody. And this implies that you have to use your savings as a company to meet those obligations. But we do this because when we speak about ESG, meeting your obligations when you can afford to is ESG. If every one of us can afford to lose some money, but help create a safety net in the economy, to have solidarity among businesses, this will help companies to survive, to avoid having to fire people, and to be ready for the economy to open up again as soon as possible.

The big occupiers that try to speculate on rents are the worst family member of the common economy. That's very simple. And actually, anybody of this kind, we are prepared to fight in a very strong way because it's a matter of culture, it's a matter of ethical approach, and they deserve to face strong companies fighting them very aggressively.

Would you say the Italian real estate market has any specific characteristics that might hinder or slow its recovery from this crisis compared to other European markets?

One element of vulnerability is that the real estate industry and capital markets are less mature than other countries. It is more dependent on international capital. There is a big difference between international capital and domestic capital because domestic capital, for a number of reasons — that can be currency, it can be mission-related investment or other things — can support the local economy more profoundly than international capital. International capital is more opportunistic, and more flexible in switching geographies all over the globe. This is part of the Italian market's vulnerability.

Which area of the Italian property market would you say is most likely to experience distress in the coming months and years as a result of the coronavirus crisis?

One of the big gaps in Italy in the hospitality and tourism sector is the fragmentation and the smaller scale of operators. This creates a nice diversity in Italy, which you might argue is one of the benefits of its hospitality and tourism sector compared to a more standardized global market. Certainly, there is a structural need in Italy to organize the tourism industry in a more professional way, which ultimately means that you need to have a bigger scale. Clearly, with this dynamic and particularly with the effect of the virus, more small businesses will be affected. There could be a distressed situation for many hotel owners and operators, for sure.

What aspects of the Italian property market would you say give you hope that it can make a strong recovery from the coronavirus crisis in the years ahead?

The Italian market has certain peculiarities, of course, like every country. One peculiarity above all others is that Italian assets, across different asset classes, are very much obsolete because Italy has been slower than other countries in regeneration, in repositioning assets. So this simple fact has created quite a significant gap between what the demand wants and what the supply is.

This is actually an opportunity for various reasons as we begin the recovery from the crisis. One, there is less supply than other markets, which obviously always helps when a market needs to recover. And the Italian property market has more upgrading to do than other more mature markets. These fundamental factors were already there and are independent from the virus. So, in that sense, the market will be healthy going forward.