European listed sector poised for M&A surge

Europe's listed real estate sector is set for a new round of takeovers, signalling that the worst of the downturn may be over. 'This is the time for a new round of M&A to reach the industry. It will likely be a long-term process, similar to the last wave of consolidation which hit the sector in 1995 and went on through 2007,' Philippe Le Trung, head of Investors Relations and Capital Markets at Foncière des Régions (FdR), told PropertyEU Magazine.

The French listed market in particular is expected to see more M&A activity. In France, driving deal activity is the need to comply with a 60% shareholding limit on the part of a number of SIICs, which in the coming months will be forced to re-organise their shareholding structures.

Another driver of deals, Le Trung said, is small and mid-cap companies looking to increase their visibility through acquisitions. 'The number of SIICs in France has almost tripled since 2002, reaching a total of 60 today, which is already a strong argument for consolidation. These companies need to be on the radar screen in order to attract foreign capital. Because large investment managers have a more and more global perspective, enlarging their horizons to Asia, only a limited number of European companies can gain access to their capital. This creates an urgent need to grow and increase visibility on the stock market in order to receive equity.'

Likely buyers are large quoted firms rather than opportunistic investors. Le Trung: 'Icade's takeover of La Lucette demonstrates that listed companies are the preferred bidders. Taking a SIIC private has a high cost in terms of de-listing and exiting the regime, which most private equity firms cannot afford.'

The full article appears in the September edition of PropertyEU Magazine. Click on the link below to subscribe to the full PropertyEU package.