Blackrock inks Paris value-add deal with AXA

US-based Blackrock Real Estate has teamed up with developer Pitch Promotion and Cleaveland to acquire an office building in Paris in a deal financed by local lenders Crédit Agricole CIB and BNP Paribas.

The 20,000 m2 property - l’Îlot des Mariniers - is located at 208-216 rue Raymond Losserand in the 14th arrondissement of the French capital. It was acquired from a fund managed by AXA Real Estate on behalf of an unnamed north American institutional client.

Financial details were not disclosed. AXA bought the building in October 2006 for €86.5 mln from SEB ImmoInvest which in turn purchased it in 1999 for €53 mln.

Blackrock and its partners said they plan to carry out a comprehensive refurbishment of the building, with the aim of providing flexible multi-tenant space as well as securing HQE (Haute Qualité Environementale), BBC (Bâtiment Basse Consommation) and BREEAM Very Good certification.
Delivery is planned for the end of 2017.

Originally built in 1978, the asset was previously occupied by France Telecom.

'This project is in line with our investment strategy to invest in prime buildings with excellent access to public transport. We are actively seeking further deals in continental Europe and are assessing several opportunities. France is a key market where we see potential for investors to capture attractive returns in the coming years,' commented Jean-Philippe Olgiati, head of BlackRock Real Estate in France.

BlackRock was advised by lawyers De Pardieu Brocas Maffei, notaries Wargny Katz, tax adviser Racine and technical adviser Orfeo Développement. Pitch Promotion was advised by lawyers King & Spalding. The lenders were represented by lawyers Mayer Brown and notaries Rochelois Besins & Associés. AXA Real Estate was advised by Cheuvreux Notaires.

US INVESTORS IN FRANCE
The purchase is the latest of a string of acquisitions carried out by Northern American investors in Paris. Earlier this year US fund manager Northwood Investors significantly expanded its French portfolio with the acquisition of the Pointe Métro office building located in Gennevilliers, near Paris from developer-investor Hines.

Northwood, a New York-based privately-held investor with $4 bn of assets under management, entered Europe in 2012 with the acquisition of the Défense Plaza office building in Paris, which was financed with a €210 mln loan from Aareal and Morgan Stanley.

Similarly, Oxford Properties, the real estate arm of Canadian pension fund Omers, has recently carried out its second office acquisition in Continental Europe in the space of six months with the €200 mln purchase of the RFF office building in Paris.

While historically most Northern American investors coming to Europe have had an opportunistic focus, recent entries of the likes of Northwood and Oxford point to the emergence of a more institutional-quality type of US capital fleeing the expensive home market to buy on the old Continent at a much lower cost of capital.

‘I believe we will see a wave of core and core plus capital coming over from North America,’ said a market expert who wished to remain anonymous. ‘US institutional-quality players with easy access to the equity markets will be competing with the traditional US opportunistic funds, which meanwhile have been forced to lower their return targets in Europe. In fact, much of the capital recently spent in Europe by the likes of Blackstone has had more of a core plus risk profile than a true opportunistic focus,’ the source added.