Fonciere des Regions (FdR) has returned to the acquisition trail with the all-share purchase of five prime office buildings in France for a total investment volume of EUR 267 mln. The deal, reflecting a net initial yield of 7%, is the first acquisition by the French listed investment company in over two years.

Fonciere des Regions (FdR) has returned to the acquisition trail with the all-share purchase of five prime office buildings in France for a total investment volume of EUR 267 mln. The deal, reflecting a net initial yield of 7%, is the first acquisition by the French listed investment company in over two years.

The firm announced a large disposal programme in September 2007 and sold EUR 633 mln of property in the first six months of 2009 alone.

Commenting on the acquisition, Philippe Le Trung, head of Investor Relations, told PropertyEU on Wednesday: 'This is a good entry point for us. We find current values in the market very attractive.'

The Paris-based investor and developer is buying the prime office buildings from two French life insurance companies, Predica and Groupama. The company is issuing 3.9 million new shares to pay for the assets, which are located in Paris' CBD, Lyon and Issy-les-Moulineaux. The shares will be transferred to Predica and Groupama at respective prices of EUR 70 and EUR 65 per share, representing discount of 10% and 16% to FdR’s current share value of EUR 78 per share.

To compensate its shareholders for the dilution effect of the capital increase, the company is also offering bonus subscription rights to its current shareholders allowing them to subscribe to up to EUR 200 mln of new Foncière des Régions shares at a price of EUR 65 per share.

The portfolio comprises three high-quality office buildings in Paris totalling 41,600 m2 (74% of the portfolio value), a 11,290 m2 asset at Issy-les-Moulineaux and a 2,890 m2 property in Lyon. The portfolio, with a vacancy rate of 3%, has an average residual firm-lease duration of 3.2 years. Major tenants in the buildings include the French railway group SNCF and Cisco.

Predica, which already owns 3% of FdR, will receive 1.9 million new shares, raising its stake in FdR to 7%. Groupama will become a new shareholder with a 4.8% stake in FdR after receiving two million shares at a price of EUR 65.

The buyer and the seller were not represented in the deal.