La Française Real Estate Partners (La Française REP), a new platform dedicated to managing French value-add and core/core plus mandates, is eyeing some €2 bn of investment in the next three years, according to its newly appointed president Patrice Genre.
La Française Real Estate Partners (La Française REP), a new platform dedicated to managing French value-add and core/core plus mandates, is eyeing some €2 bn of investment in the next three years, according to its newly appointed president Patrice Genre.
‘We intend to close a couple of deals by year-end as we have already introduced our clients to close to €1 bn of investment opportunities,’ Genre told PropertyEU in an interview.
Genre, co-founder and former managing director of DTZ Asset Management, was hired by Paris-based asset manager La Française Real Estate Managers earlier this month to lead the group’s new value-add unit which is 65% held by La Française and 35% held by its management.
Genre is a property professional with over 25 years of real estate experience on the Continent. In 1999, he set up DTZ Asset Management together with DTZ and expanded the unit into a €3.6 bn European platform with clients including CNP, Carlyle, JP Morgan, Carval, Apollo and WP Carey. Before then, he worked for Goldman Sachs’ Whitehall Funds as well as for construction group Vinci.
‘Given my background, particularly with the Whitehall funds, most of my experience is in opportunistic strategies, targeting an initial rate of return of between 20 and 25%,’ Genre said. This track record covers office refurbishment, speculative development, conversion to residential, retail and logistics development.
‘Following the onset of the financial crisis the market witnessed a flight to quality and most of the action moved to the core space. Today, however, we reckon that the market is bottoming out and that it is time to start investing once again in value-add products,’ he added.
With competition mounting for prime assets, La Française REP aims to tap into investors’ growing need for core product by investing in class B buildings and repositioning them as core, Genre said.
'Prices are getting expensive in central Paris and on the supply side there is a need for investors and asset managers willing to take either a technical risk or a letting risk to turn existing, obsolete buildings into high-quality assets and therefore benefit from today's strong interest in the core arena,’ he noted.
La Française REP will seek to position itself as the local partner for this type of investment, Genre added. 'International private equity groups have achieved an incredible level of fundraising over the past two years, and are looking to deploy part of that capital into Paris. Given the specificity of the French market and its tax system, they need a local asset manager with experience and good sourcing capabilities,’ he commented, adding that apart from La Française REP there are very few asset managers ready to source and execute a value-added strategy in France.
SPECULATIVE DEVELOPMENT
La Française REP plans to focus on speculative development and office refurbishment to bring new high-quality space to the Paris market at a time when supply of new product remains scarce due to the lack of finance. ‘Our strategy is about asset management rather than playing the property cycle,’ he said. ‘We see value potential in a strategy focused on the development and delivery of new products in two or three years when the economy will be in full recovery. In terms of refurbishment, we will focus on obsolete shopping centres across the country as well as out-of-date office stock which needs to be brought up to standard particularly in terms of sustainability requirements.’
La Française REP will also be active in the core space by servicing some of La Française’s global mandates in France, but it will differentiate itself, Genre said. ‘Our main focus area will be separate accounts and dedicated mandates. We will target large lot sizes, as we will work exclusively with institutional investors,’ he noted.
The company has already received a couple of core mandates from French investors. Genre: ‘There is a lot of money chasing very few products so the network and the ability to source off-market deals will make all the difference.’ To source transactions, the company will benefit from the network of La Française Real Estate Managers, which currently counts some 120 real estate professionals in France alone.
La Française has gone to great lengths to build a European asset management platform over the past year. Just four months after forming a strategic partnership with UK-based Forum Partners, the company signed an over-the-counter agreement to acquire Cushman & Wakefield Investors (CWI), the investment management business of Cushman & Wakefield earlier this year.