Carrefour plans EUR 3bn property IPO in 2008

French retail giant Carrefour said Thursday it plans to sell off part of its enormous property portfolio via an Initial Public Offering (IPO) in 2008. The firm said it aims to raise EUR 3 bn from the bourse launch of its newly-created European real estate vehicle which will be called Carrefour Property. The planned IPO will however be 'subject to market conditions', it added.

At a press conference on the company's first-half results, Carrefour also upped the estimated value of its property portfolio to EUR 20-24 bn, compared with a EUR 15-20 bn estimate given in March. Stores represent about EUR 17 bn to EUR 20 bn of Carrefour's real estate, while shopping malls represent another EUR 1 bn to EUR 1.5 bn of assets. The newly created property unit is expected to contain 280 hypermarkets and 540 supermarkets mainly in France, Italy and Spain, or around 60% of Carrefour's total property assets by value, the French company said.

Carrefour said it plans to retain strategic and operational long-term control of its property unit. It added that it also intends to sell off property worth EUR 1.5 bn in 2007 and 2008, and will use the EUR 4.5 bn proceeds of the sale and the IPO to fund a share buy-back.

Last March, French billionaire Bernard Arnault who is number 7 on the Forbes list of richest people in the world, and US real estate investment fund Colony Capital, jointly acquired a stake of almost 10% in Carrefour. The two investors have since been pressing Carrefour CEO Jose Luis Duran to free up capital by selling off the company's real estate assets.

Carrefour's French rival Casino made a similar move in 2005 with its real estate portfolio. Casino then founded Mercialys, a publicly traded property unit in which it retained a 44% stake.

Duran said that Carrefour plans to retain an 80% stake in the new real estate subsidiary. He added that the retailer plans to open some 1.2 million square meters of new stores per year. The new stores will be located mainly in emerging markets in Europe. Earlier this year, Carrefour bought the Polish supermarkets of Dutch retail group Ahold for EUR 375 mln and plans to open its first stores in Russia next year.

Last week, the French retailer announced it was withdrawing from the Swiss market after failing to meet its growth targets in the Alpine country. The group has also cut back its activities in Portugal. At the end of July, it sold 12 hypermarkets that operate under the brand Carrefour au Portugal, as well as nine gas stations for EUR 662 mln to Portuguese property company Sonae Sierra.