A consortium led by Europe's largest listed property company Unibail-Rodamco has stolen a march in Brussels over rival groups led by French peer Klépierre and UK REIT Hammerson as the new co-developer of the NEO 1 project, with the 112,000 m2 ‘Mall of Europe’ as its centrepiece.
A consortium led by Europe's largest listed property company Unibail-Rodamco has stolen a march in Brussels over rival groups led by French peer Klépierre and UK REIT Hammerson as the new co-developer of the NEO 1 project, with the 112,000 m2 ‘Mall of Europe’ as its centrepiece.
The Franco-Dutch retail giant will develop and operate the Mall of Europe, representing a €550 mln investment, while its partners CFE and Besix will develop the residential element. This is Unibail-Rodamco's first project in Belgium - and its most prestigious. Indeed, the €900 mln NEO Brussels project is located in the bureaucratic and administrative heart of Europe and is designed to affirm the Belgian capital's credentials as a truly international city.
The French retail giant’s triumph in Brussels corresponds with a return to grace for its home market. While the socialist government led by Francois Hollande still has its work cut out for it to make the French economy more competitive and robust, signs so far this year suggest that real estate investors are already anticipating an improvement. Last week it emerged that a string of heavyweight international investors including US private equity firm Colony Capital, Dutch pension fund Blue Sky Group, asset manager Amundi, French insurers Crédit Agricole Assurances, AXA and BNP Paribas Cardif as well as US investment manager Pimco and Sogecap have piled into Carmila, the new real estate company created by Carrefour. The capital injection has enabled the French retail giant to fork out €2.7 bn to acquire two portfolios of Carrefour-operated assets and create its own property vehicle.
The deal overshadows a previous coup in France by Lone Star: earlier this year, the Texas-based investor acquired the busted CMBS loan structure underpinning the massive Coeur Défense office complex for €1.3 bn. According to financial blog Costar, the deal was oiled by a five-year loan from Bank of America Merrill Lynch (BAML). Market watchers claim the move by the US investment bank heralds an ambitious return to the European real estate financing market and that it will seek to distribute the Coeur Défense loan through syndication or the capital markets.
Other French deals involving international investors over the first three months of the year included UK REIT Hammerson's acquisition of 75% of Saint-Sébastien shopping centre in Nancy from AXA Real Estate for €132 mln, and the acquisition of four retail assets from Amsterdam-listed Corio by US private equity firm KKR for €104 mln. The biggest retail deal, however, was scooped by a French-led consortium: Paris-listed developer-investor Apsys put €700 mln on the table to take control of the Beaugrenelle shopping centre in Paris and edge out other competitors including China's State Administration of Foreign Exchange (SAFE), Union Investment, Hammerson and Rockspring.
US buyers lead acquisition drive
Elsewhere in Europe, US investors have also led the acquisition drive by inter-regional equity during the first quarter of 2014. PropertyEU Research tracked 30 transactions of €20 mln-plus by US players from January to end-March 2014. The list of US buyers is dominated by the large private equity firms looking for distress or value-add opportunities like Lone Star, which was the biggest spender of the US pack thanks to its acquisition in February of Coeur Défense, and vehicles managed by Blackstone which carried out at least four large real estate transactions totalling €1.1 bn in Europe over the period. This week, Blackstone added another trophy asset to its European collection after acquiring the Sumatrakontor mixed-use building in Hamburg's HafenCity from fund manager Pramerica’s open-ended TMW Weltfonds, which is in liquidation. The list of other big US investors includes real estate stalwarts Hines, Apollo Global Management, Morgan Stanley, Kennedy Wilson, Pramerica, Perella Weinberg and CBRE Global Investors.
While one swallow does not make a summer, prospects for the French market do appear to be looking up, according to a market snapshot by Cushman & Wakefield. After a decline of 0.3% in Q1, consumer spending is expected to increase by 0.6% in Q2, the adviser said. 'While headline inflation is likely to be pushed upwards, consumer spending will be sustained thanks to a stable unemployment rate, a modest increase in purchasing power and a decline in savings.' An upturn in consumer spending will, however, not benefit the entire French retail real estate market in 2014, the adviser warned. 'Secondary sites and retail units and developments that lack optimum configuration will, therefore, continue to suffer from retailers’ wait-and-see stance.'
Savills is even more upbeat after reporting that France saw around €4 bn of commercial real estate change hands in the first quarter of 2014. This quarter has been one of the strongest since the downturn and is significantly up on the five-year average of €3.3 bn, the adviser said. By year-end, Savills expects investment turnover to reach between €18 and €19 bn.
Just 18 months ago, France was viewed as the ‘sick man of Europe.’ The renewed interest in the French market may not mean it now has a clean bill of health, but at least it appears to be getting back on its feet.
Judi Seebus
Editor in chief
Related articles:
Unibail-Rodamco to develop 'Mall of Europe' at NEO Brussels
Plans to move Heysel stadium boosts Neo Brussels project
Klépierre JV closes €2b mall sale to Carrefour
Carrefour launches shopping centre landlord
DEALS Q1: Billion-euro deals are back
DEALS Q1: France stands out in retail shopping list
DEALS Q1: US investors lead inter-regional charge into European property
French investment hits €4b in Q1, says Savills
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Blackstone buys Hamburg’s Sumatrakontor
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