Canadian investor Ivanhoé Cambridge has agreed to sell two Paris assets to French REIT Gecina for €1.24 bn and said it is raising its stake in the office landlord from 21% to 23%.
Canadian investor Ivanhoé Cambridge has agreed to sell two Paris assets to French REIT Gecina for €1.24 bn and said it is raising its stake in the office landlord from 21% to 23%.
The transaction, which adds 122,200 m2 of office space to Gecina’s portfolio, involves the 88,600 m2 T1 & B tower in the La Défense business district, which currently houses the global headquarters of Engie Group, formerly GDF Suez; a 33,600 m2 office complex at 75 Avenue de la Grande Armée, currently housing the historic headquarters of PSA Group in Paris’s Central Business District.
As part of the agreement, Ivanhoé Cambridge is upping its stake in Gecina from approximately 21% to 23%. Ivanhoé Cambridge's interest in Gecina is held in concert with US private equity group Blackstone, and the two partners together hold just under the 30% required by law to launch a full bid.
'The increase of our economic participation in the investment of the concert with Blackstone to 23% of Gecina’s share capital, combined with the sale of our assets to Gecina, demonstrates our support for the strategy of this leader in the office building sector in the Paris region,' commented Daniel Fournier, chairman and Chief Executive Officer of Ivanhoé Cambridge, a subsidiary of institutional fund manager Caisse de dépôt et placement du Québec.
The deal is in line with Gecina's ambitious growth strategy focused on offices aimed at consolidating the firm’s leading position for offices in Paris.
‘We are planning to focus on larger offices in the city centre of Paris and in mature office districts near the capital city, as well as on the Part Dieu district of Lyon,’ CEO Philippe Depoux recently told PropertyEU. The Paris-listed giant will implement a value-add strategy focused on the acquisition of iconic buildings in need of repositioning or redevelopment, he added.
‘But we plan to be more selective than ever regarding locations,’ Depoux noted, added that the company will consider investments primarily in Paris’ city centre, La Défense, Boulogne, Issy-les-Moulineaux, Neuilly-sur-Seine, as well as the Part Dieu district in Lyon. Depoux: ‘The market is incredibly hot. There is huge competition for core buildings, but we are willing to take on some letting risk,’ Depoux said.
Gecina’s new investment strategy reflects a strategic change in the group’s shareholding structure, which last year saw the end of a 10-year ownership by Spanish investor Metrovacesa. The Spanish investor sold its €1.5 bn stake in the French firm to four major international shareholders; Norway's Norges Bank, France's Credit Agricole Assurances, US investor Blackstone and Canada's Ivanhoe Cambridge. Metrovacesa sold 16.8 million Gecina shares - its entire stake - at €92 a share.
Blackstone and Ivanhoe Cambridge already held 23.03% of Gecina after agreeing on a debt-for-equity swap earlier this year with former Gecina CEO Joaquin Rivero and ally Bautista Soler. They took a further 6.92% in the company, bringing the total holding to 29.87% - just under the 30% required by law to launch a full bid. Credit Agricole Assurances already had an 8.56% stake and brought its stake to 13.4%. Norges Bank - which manages the giant Norges Pension Fund Global – acquired a 9% stake, bringing the total holding to 9.7%.
The group’s main priority this year is to reduce its exposure to non strategic assets through opportunistic sales and then reinvest the proceeds in new office buildings, according to Depoux. In total, Gecina owns €10.3 bn of assets, €6.5 bn of which are offices.
As part of this strategy, Gecina is considering the sale of a portion of its €1.1 bn healthcare portfolio while continuing with the gradual disposal of its low-yielding residential holdings. ‘We are currently looking into an opportunistic sale of a part of the healthcare portfolio. The housing portfolio is also non-core and we’ll be looking to sell the units to private buyers as they are vacated. The natural rotation of this portfolio every year is about 15% so this is the best way for us to optimise its value.’