Société de la Tour Eiffel in partnership talks with Patron

French REIT Société de la Tour Eiffel has entered into exclusive negotiations with London-based real estate private equity group Patron Capital Partners about a share-property swap.

The proposed deal will see Société de la Tour Eiffel offer Patron shares totalling 8.4% of its share capital in exchange for a 20,000 m2 office complex on the Paris fringes.

The asset, located in the Malakoff district of the French capital, is currently let to corporate voucher distributor Edenred on a lease with eight years to run. The proposed deal would generate an initial return of 7.2%.

The share exchange values the property at approximately €28.4 mln after debt is taken into account. The deal will see some 568,000 shares in Tour Eiffel issued at €50 each. The company’s shares have ranged between €40 and €52 over the past year.

The deal is set to increase Société de la Tour Eiffel's overall portfolio by 10%, with Paris office assets representing 60% of the total portfolio. The deal is subject to an independent audit set to be concluded in November.

In a statement announcing the deal, Société de la Tour Eiffel said that the transaction ‘should serve as a precursor to an ongoing business partnership’ with Patron.

Patron Capital managing director Keith Breslauer added: ‘Patron is delighted to re-enter the French SIIC market to actively participate alongside a successful management team in the implementation of Société de la Tour Eiffel's strategy, which we believe rightfully targets one of the most dynamic segments of the French market.’

Société de la Tour Eiffel is listed on NYSE Euronext Paris. The company’s portfolio of offices and business space spread evenly between the Paris area and the regions is valued at €915 mln.

Patron Capital manages €2.5 bn of capital across several funds with offices in London, Luxemburg, Barcelona, Milan, and Dreieich (Germany).