BMO Real Estate Partners has acquired a prime luxury retail property located on Rue du Faubourg Saint-Honoré in Paris’s 8th Arrondissement. The investment volume was not disclosed, but the sale-and-leaseback transaction with Italian fashion brand Ermenegildo Zegna reflected a net initial yield of 3.4%.
While less well known than the nearby Avenue des Champs Élysées, Rue du Faubourg Saint-Honoré is one of the most fashionable streets in the French capital. The street features many of the top global fashion brands, including Ermenegildo Zegna. Other prominent building include the Élysée Palace, official home to the French President, the residences of the US and Canadian ambassadors, the UK embassy and several art galleries.
The 1,000 m2 Ermenegildo Zegna store at 50 Rue du Faubourg Saint-Honoré was refurbished in 2012. BMO REP acquired the asset on behalf of its pan-European retail property investment fund. The fund is aimed at institutional investors and carries out selective, high-quality retail investments in prime shopping streets within major European cities.
In line with the fund strategy, the acquired asset is situated in an ultra-prime location in direct proximity to the Hermès flagship store and with Rue du Faubourg Saint-Honoré being widely regarded as one of the most prestigious addresses in the world, due to the presence of virtually every major global luxury brand.
Ian Kelley, fund director Europe at BMO Real Estate Partners, commented: 'This latest investment is a true trophy addition to our portfolio, and represents the fund’s 4th retail property in Paris, one of the world’s most sought-after ultra-prime shopping destinations. The outlook for both the city and this asset specifically are very positive; Paris continues to attract record tourist numbers, while strong demand continues from the best brands for this esteemed location.'
The transaction was sourced off-market by Draco Partners. BMO REP was also advised by Lasaygues, King & Spalding and Taxand. The vendor was advised by Wargny-Katz and Degroux Brugere.
BMO REP had €6.4 bn of assets under management across core European markets at end-September 2017.
