French mutual insurance group SMABTP has launched a €300 mln cash offer for French REIT Société de la Tour Eiffel.

French mutual insurance group SMABTP has launched a €300 mln cash offer for French REIT Société de la Tour Eiffel.

SMABTP is offering €48 a share for STE, which compares to a price of €49.19 when the market closed on Wednesday.

'In the current financial environment, SMABTP believes that real estate, if well selected and managed appropriately, may constitute an investment contributing appropriately to cover its long-term commitments vis-à-vis its policyholders and shareholders,' the insurance group said.

SMABTP is France’s leading insurance group for the construction and public works sector.

The offer is conditional upon the tender of at least 51% of STE's share capital. SMABTP said, however, that it plans not to exceed the 60% threshold required by French law for STE to maintain its tax-efficient REIT status.

If the offer is successful, SMABTP said it will strengthen STE's financial position and support the company's business plan.

Over the past three years STE has been focussing on selling non-strategic assets to deleverage the business, which resulted in its loan to value dropping from over 60% in 2010 to 47% at year-end 2013.

Even so, SMABTP said the high level of debt remains too big a risk factor. 'We believe that a recovery in investment is not possible without a sustainable ownership that can strengthen the capital structure and finance the continuation of the main strategic guidelines established by the company,' the company said.

'The backing of of a financially-sound, long term investor will allow STE to put an end to this deleveraging strategy which forces the company to sell assets quickly,' it added.

STE has been at the centre of a number of bids in the recent past. In October Patron Capital said it was in exclusive talks to swap an asset for an equity stake in the company. The private equity investor broke off talks later on when STE's shareholder and businessman Chuc Hoang sought to take control of the company. The investor currently owns a 29% stake in the Paris-listed REIT through a number of companies including MI 29, Eurobail and Foncière Wilson.

SMABTP is a long-term investor with a property portfolio valued at roughly €930 mln. The assets are mostly offices located in or near Paris (Meudon, Nanterre, La Garenne-Colombes, Asnières, Saint-Ouen).