The sale of Risanamento's office portfolio marks the return of Middle Eastern capital to the French real estate market.
The sale of Risanamento's office portfolio marks the return of Middle Eastern capital to the French real estate market.
Risanamento, the troubled Italian developer, is selling over half its French office portfolio by market value to a partnership of UK investor Chelsfield Partners and the Saudi Olayan Group for over €1.2 bn, net of taxes. The package consists of nine commercial properties in Paris providing a total of 76,700 m2. The price represents a 16% premium to the assets’ latest appraised value of €1.05 bn.
Chelsfield Partners and Olayan Group have paid a deposit of €25 mln and will now carry out due diligence on the properties. On completion, the deal will generate some €280 mln of cash for Risanamento once debt is repaid. Chelsfield is controlled by Qatar Holding, the sovereign wealth fund of Qatar, together with the Olayan Group, the Bank of East Asia and the family interests of Elliott Bernerd and Sir Stuart Lipton.
The company focuses on UK commercial real estate and the deal would represent its first foray outside its home market. Chelsfield Partners declined to comment on the deal.
The transaction marks the return of Middle Eastern investors to the French real estate market after months of limited investment activity. According to research by Cushman & Wakefield, sovereign wealth funds were responsible for a modest 8% of French investment last year, largely as a result of the disappearance of Middle Eastern players.
The deal is also likely to be one of the largest commercial property acquisitions signed in France since the start of the financial crisis in 2008. France saw a total of €15 bn invested in commercial real estate last year.
Debt-laden Risanamento mandated Bank Leonardo & Co. last summer to sound out investors’ interest for its portfolio of French o¬ffice and retail assets. The company said it received several expressions of interest both for parts of the portfolio and for the entire package, which accounts for 52% of its total portfolio by market value. Major assets include 50 Avenue Montaigne, which was bought in 2005 from Unibail-Rodamco for €233 mln as well as the Actualis mixed-use building acquired at the peak of the market in 2006 from Financière Pinault for €230 mln. The office and retail scheme provides 20,000 m2 of space at the corner of Rue de la Chaussée d’Antin and Boulevard Haussmann.
Golden Triangle
The assets are largely located in the prime Triangle D’Or area in the eighth district of Paris and generated €35.6 mln of rents in the first nine months of the year, up 9.5% on the same period a year before. At end-2012, Risanamento’s French properties had a market value of €1.05 bn and debt of €757 mln, largely provided by German lender WestImmo (balance of €584 mln, due in 2017) and Credit Mutuel (€170 mln, due this year).
Risanamento has a total portfolio of €2 bn and debt of over €1.1 bn. The company has been trying to sell assets for months in a bid to refinance its debt. Last year, it divested 118 Avenue des Champs-Elysées in Paris to Pramerica Real Estate Investors for €135 mln. Similarly, it sold its massive Falck development site in Milan’s San Giovanni district and is currently in the process of selling its flagship project at Milan’s Santa Giulia.
VIRNA ASARA
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