An Asian investor client of M&G Real Estate and wealth manager Eternam have invested alongside RedTree Capital’s French value-add fund to acquire an office complex in Paris.
The 13,000sqm, three-building asset in the Opera district of the city is the fourth purchased for the RedTree fund, which now manages a portfolio worth €360m.
RedTree, founded by Eric Sasson, the former European real estate head of The Carlyle Group, said it had raised €153m at the end of 2020 and intends to increase this to €250m by June.
The fund includes French institutional investors, an international multi-manager, insurance companies, a German pension fund and is being advised by Capra Global Partners.
M&G confirmed that it co-invested in the latest transaction on behalf of an unnamed Asian investor, but would not comment on its involvement or the identity of its client.
In October, M&G told IPE Real Assets that it been awarded a mandate by an Asian investor to acquire large assets across Europe, starting with the £112m (€124m) purchase of Fleet Place in London.
RedTree has teamed up with co-investors in the past to acquire assets. Three years ago, it co-invested with two funds managed by Invesco Real Estate to acquire another office building in Paris.
“Co-investments enable us to acquire larger assets, and also increase the diversity of our pipeline,” said Sasson.
“Going forward, we anticipate we will continue to – and increasingly be able to – offer investors attractive co-investment opportunities. We are currently working on a very interesting and diverse pipeline of off-market opportunities.”
RedTree pursues a value-add strategy and will refurbish the historic 1879 buliding located at Ilôt 4 Septembre together with project manager JLL AMO and architects YMA.
Sasson said the refurbishment would “deliver a high-specification buliding to meet the expectations of future occupiers, whilst also delivering investors value-add returns in one of the strongest office markets in Europe”.
The Paris office market has been busy in recent weeks with a flurry of deals at the end of 2020 involving Tishman Speyer, PSP Investments, BMO Real Estate Partners office deals, and a more recent acquisition by Aviva Investors.
Asked about the timing of the deal when there is economic uncertainty and questions about the future of work practices, Sasson said: “Despite the pandemic, we still see strong demand for high-quality offices in top locations across Paris, and believe there will always be demand from investors and occupiers.
“Humans crave social interaction, and offices remain an essential environment for collaboration, learning – particularly for junior employees, company culture and for many, a better workplace than home.
“Demand in Paris, in particular, has been strengthened by Brexit, more so than other key European countries. However, what we do see is the pandemic accelerating changes in design and the way in which companies use space – for example, technological innovation and more user-orientated buildings, which is what RedTree endeavour to deliver.”
Established in 2014, RedTree has invested €835m in 12 investments in 24 properties in the French real estate market.
Asked whether he planned to expand the business into other markets, Sasson said: “For now, our focus remains on France, but in the medium term we have plans to grow RedTree into a larger Pan-European platform.”
To read the digital edition of the latest IPE Real Assets magazine click here.
