Northwood to take control of Commerz Real’s Cegereal for €285m

US Group Northwood Investors has signed an agreement to acquire the 59.78% stake held by Commerz Real's HausInvest fund in Parisian office REIT, Cegereal.

Northwood Investors is to pay €35.62 per Cegereal share, representing a 20%-plus premium on the company's closing share price (€27.43) on the day before the announcement.

Cegereal, owns a €960 mln portfolio of a total of 125,000 m2, said it believes the acquisition 'will provide it with a solid platform from which to launch its growth'.

The €285 mln acquisition, which is expected to complete in November 2015, will not result in any changes to Cegeral's executive management team headed by Raphaël Tréguier.

Following the deal, Northwood will be required by French law to file a tender offer for all Cegereal shares held by the public, at the same price per share. The company said, however, it intends to retain Cegeral's tax-efficient REIT status.

'We continue to see improving fundamentals across the Parisian office market and our investment in Cegereal provides Northwood with a critical mass, a difficult to replicate portfolio and a well-regarded management platform that we can, in our capacity as a long-term investor, assist in growing the asset-base over time,' said Khaled Kudsi, senior managing director of Northwood Investors.

Cegereal CEO Raphaël Tréguier added: 'This tie-up confirms our wish to create a leading prime office property company in France. With the support of Northwood Investors, we now have an internationally renowned team along with the resources needed to support our future growth.'

The deal is in line with Northwood's European expansion strategy. 'Cegereal complements our existing French portfolio and constitutes a unique opportunity to participate in the development of a best in class French office REIT,' said Jérôme Anselme, managing director at Northwood Investors.

Commerz Real was behind Cegereal's creation in 2006, when it set up the company as a tax-efficient vehicle for the Paris office assets held by its Hausinvest open-ended fund. Today, Cegereal is the first French property company with a full environmentally-certified portfolio.

'After a decade of contributing to HausInvest's earnings, we would like to thank the independent directors and management team for their work. Cegereal is an innovative, leading-edge company and should be able to take full advantage of the support of a heavyweight like Northwood Investors,' said Gerry Dietel, fund manager at Commerz Real.

Brookfield Financial and JP Morgan acted as financial advisor to Northwood Investors on this transaction; Darrois Villey Maillot Brochier AARPI and Sidley Austin acted as Northwood’s legal advisors.
Fidal acted as Commerz Real’s legal adivsors. White and Case acted as Cegereal’s legal adivsors

Northwood, a New York-based privately-held investor with $4 bn of assets under management, entered Europe in 2012 with the acquisition of the Défense Plaza office building in Paris, which was financed with a €210 mln loan from Aareal and Morgan Stanley.

The investor has recently carried out a number of acquisitions in the UK and Continental Europe, including the purchase of a Four Seasons hotel in Prague and the major €800 mln acquisition of Highcross, the owner of 7 million sq ft (650,000 m2) of office and industrial property across the UK.

In France, the Group last year bought a portfolio of 10 office/industrial parks in major regional cities offering a total leasable area of 2.8 million sq ft.