Icade, the Paris-listed developer and investor, confirmed on Wednesday that it is in exclusive negotiations to acquire Eurazeo’s 50.5% interest in smaller peer ANF Immobilier.
Icade and ANF, both SIICs or French real estate investment trusts, initially announced their intention to merge in July as they published their results for the first half of 2017.
Under the deal, the latest example of consolidation in the listed French real estate sector, Icade will pay €22.15 a share for the ANF shares held by French investment company Eurazeo in a deal valued at €213 mln. A mandatory offer for the remaining ANF shares will follow in November, with a potential merger of the two businesses envisaged for next year.
The offer price reflects a premium over ANF's trading price of 5% based on the closing price on 21 July 2017, the day before the announcement. It values ANF at around €409 mln.
The deal, which was already been approved by both company boards, is conditional on the sale by ANF Immobilier of a €400 mln residential and retail portfolio in Marseille and Lyon to French asset manager Primonial.
Following the sale to Primonial, ANF Immobilier will own a portfolio valued at €457 mln primarily consisting of office buildings in Lyon, Marseille, Toulouse and Bordeaux. The yield on the properties stands at 5.8%.
Icade, part of Caisse des dépôts Group, said that the transaction is part its strategy to diversify its portfolio and expand in the main regional cities, with a target of 5% of property assets outside the Paris region. As a result of the deal, Icade’s portfolio would increase from €9.9 bn to €10.3 bn, of which €4.6 bn of offices. The deal also allows Icade to acquire a €194 mln development pipeline, with a forecast yield on cost of 6.7%, the company added.
The transaction, which is being financed with debt, would have a maximum impact of about +3% on Icade’s loan-to-value (LTV) ratio. As a reminder, this ratio stood at 39.4% as of June 30, 2017.
Icade has €9.9 bn of assets under management. About 80% of the total comprises French offices, business parks and other commercial property assets. Healthcare property accounts for the remainder.
The company reported EPRA earnings of €146 mln in July, up 7% on the same period last year.
